If you don’t already own a home, it may seem more difficult than ever to purchase one. In less than two years, home prices, illustrated on the chart below, have increased 32.9%. As someone struggling to get into a home myself, it doesn’t feel like the market will ever slow down. If you already own a home and locked in a low interest rate, the current state of the housing market might not even be noticeable for you and your family.
“ you know our rule of thumb for total spending on a home is to keep it below 25% of your gross income”
Curious on this, why do you guys make this a percentage of your gross? Shouldn’t this be on take home pay, since you make mortgage payments using after tax dollars? Sure, a counter could be “interest is deductible”, but on a fixed rate mortgage you will eventually reach a point where the majority of the payment goes to principal, at which point you can’t depend on the interest deduction.