Buying a home is the best investment you can make, and it may seen like the right thing to do for the economy, but what is the best for you?
Homes are still high in value, maybe too high, and just because your bank will lend you big bucks [nearly $500,000] on small incomes of as low as [$80,000] does the 30 year mortgage make sense to you in these times?
First time home buyers are being warned that generous loan criteria offered by banks could land them in mortgage stress for many years to come.
Buying a low cost home is the better option with joint incomes under $100,000.
Use the Rule of Three
Try to use the rule of three. If you earn $100,000 as a gross income, then you can aford a $300,000 mortgage even when interestrates reach 9%. If you earn $200,000, then you can easily afford a $600,000 mortgage [even if you wisely decide that you don't want this much financial burden]. The solution to buying a more expensive home should be greater earnings, not loose lending.
Buying the biggest home you can afford during the lowest interest rates in history ever is foolish nad may come back to bite you, and the banks should know better, and in my view they may be taking advantage of young inexperienced home buyers without letting them know the consquences of interest rate rises, their other financial commitments that are hidden inside each mortgage document, and the banks foreclosure policy should they fail to make repayments.
Buying a home on the basis that prices and demand will surely rise may be a myth from the past echoes of the baby boomers last gasp.
