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Originally Posted by JSH
Personally I would never take out a mortgage that was 50% of my net income. They are estimating a payment of $2185 a month which likely includes taxes, insurance, and PMI.
How does someone that is paying 50% of their income on a mortgage afford to do the maintenance on a house? Or eat for that matter. When the furnace goes out and a new one is $7,000 - then what?
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You won't find a lender that would fund a 50% income to mortgage ratio. Maybe back in 2005, but lenders seem to be a lot more strict these days.
I don't know how that housing program can require people to have less income than would qualify for a loan to purchase it.
All that said, in general I'd be fine having half my income go towards a mortgage, taxes, and insurance because I'd rent out spare rooms, and I would make sure I lived in such a way that made rooms available to rent.
If the choices are a. walk away from a mortgage, losing all equity, and entering a financial death spiral, or b. cramming the whole family into a single bedroom and renting out the others, it seems option b. is better.
The 2 basic ways to become wealthy are either a. to have a high income, or b. build equity in a home, or both.
Perhaps there's a 3rd option where you rent an enormous house from someone that allows subletting. Then you rent out rooms in the house and bank whatever the difference between rents and monthly cost is.