What we can afford is different that what we should pay

A potential client I was speaking to the other day got me thinking about what we CAN afford in terms of monthly mortgage payments and what we SHOULD be paying.  

I'm not in the mortgage industry, so correct me if I'm wrong, but a mortgage should equal no more than 28% of your monthly gross income.  Total debt should be no more than 36%.  I think some people look at these numbers and forget that they are maximums.  If 28% is the max of what your mortgage should be, then wouldn't it be nice to have a mortgage that is 20%?  

The wisdom of living beneath your means applies well here.  Plus when it comes to home buying, if you don't max yourself out on the mortgage, then think of the money you'll have to buy the furnishings!

 

 

 

4 Comments on What we can afford is different that what we should pay

Yes this is so true.  Nothing worst then to see a client become house poor, but to many times it hapens.

08/02/2007 04:56 PM by Steve Allen (Re/Max of Greensboro)

Nathan- I try to get my clients to find out what they can afford, and than buy something at a way lower price so that they can afford to live

08/03/2007 12:00 AM by Dan Tobias - Northridge Real Estate Expert (Windermere Real Estate)

This is what happend here in Las Vegas... and all those homes are now on foreclosure or short sale

08/04/2007 03:30 PM by Arina Hanciulescu (ELITE REALTY)

Good post Nathan.  I think you are absolutely correct in that what you can afford is different than what you should be paying for your particular situation.  I think that money management, budgeting, and living within your means should be topics that are taught in the schools so from an early age people will learn how to stay AWAY from foreclosure later.

08/04/2007 03:48 PM by Huntsville Alabama Real Estate Agent, Kimberly Grant (Exit Leon Crawford Realty)

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Real Estate Agent: Nathan Blair - Salt Lake City, Utah Real Estate (RE/MAX Results)
Nathan Blair - Salt Lake City, Utah Real Estate
Salt Lake City, UT
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