Buying too much house can cause you to be house poor before you know it. Know how much home you can afford before you buy. Discover your mortgage options:
SUMMARY
In this video, Dave takes a call from Kathy in San Francisco. Kathy is a teacher with a monthly income of $4,300—but her house payment is $2,200 a month. With over half of her monthly income going toward paying off her mortgage, she asks Dave, “Should I sell my house?”
Dave’s answer is simple: the house has to go. He recommends that Kathy downsizes and purchases a home she can pay off in retirement. This creates an opportunity for her to get out of debt and start saving money now.
Dave always recommends saving a down payment of at least 10–20% on a 15-year, fixed-rate mortgage and limiting your monthly payment to 25% or less than your monthly income. This allows you to attack your debt snowball, boost your retirement fund, and pay off your mortgage quickly.
RESOURCES
Want to estimate your monthly mortgage payment? Check out our Mortgage Calculator:
How much house can you afford? Find out here:
Is your mortgage more than you can afford? Consider downsizing:
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