back when I was taught about mortgage rules it was 28% of your income including your mortgage payment.
back when I was taught about mortgage rules it was 28% of your income including your mortgage payment.
Funny you mentioned that. It is the way it used to be. Back in the early 2000’s my wife was a real estate agent. She came home one day and said the mortgage rules had been changed and they upped the number to 50%.
I said to her, “they are going to drain the apartment complexes and rental units and pump up the buyer pool. They are going to creat a bubble in house prices.”
As we learned, it was not really a house price bubble, but a credit bubble. And I was not quite smart enough to take advantage of it the way I should have, which would have been to buy as much as possible as soon as possible. Instead, I became a renter.
The good news is that when we left Seattle for Kentucky, in 2011, our rent had never gone up. We were paying $1,600 a month for a house valued at $525k with a several hundred dollar per month real estate tax bill alone.
Frankly, that was my first clue that the economy was being falsely pumped.
In my day it was 28-36 and no more. Then it got to where there were no limits. Just lie until the ratios get down to where they need to be.
As for the principle increasing, they got rid of negative amortization loans decades ago.