>With a household income of $150,000, some money in the bank, and mortgage rates around five percent, you could rather easily qualify for and service the debt on a $600,000 house. Why is this such a mystery?
Well, once you do the math, you will see that $150k isn't enough to afford a $600k house.
Lets say you have enough savings so that you only need to borrow $500k, this translates to $3000 in monthly mortgage at the current rates. Property taxes, insurance, maintenance and utilities will add $1000 per month. The mortgage interest brings $500 tax benefits per month. So you total housing cost is $3500 per month.
A $150k income brings home about $6000 after taxes and deductions. So you are left with $2500 to cover foods, clothing, entertainment, vacation, transportation, education, child care and all other expenses for a family of 3-4. This may sound a lot elsewhere, but it is pretty tight for Boston. |
