It's a rule of thumb that your total debt should not exceed 1/3 of your income.
It has no economic foundations whatsoever.
Yet, banking institutions use(d?) this rule to reject whatever application they were not comfortable with.
It has no economic foundations whatsoever.
Yet, banking institutions use(d?) this rule to reject whatever application they were not comfortable with.
Unless tax deductions work very different in the US than they do in Denmark, that is pretty bad advice.
Here, sitting on a 60% mortgage loan that is many times higher than your annual income is genuinely a good idea for most people because of tax law. It’s not until you have assets that are worth more than your house that it becomes a good idea to pay off the entire loan.
Meanwhile having even a small “quickloan” that is 0.1% of your annual income is a very stupid idea.
I mean, if you don’t know finance at all then maybe it’s a good rule of thumb as you’ll never bury yourself in debt, but loans aren’t just loans.
I've heard that monthly housing shouldn't be more than 1/3 monthly take home. Is that what you're thinking?
Or investing on margin.
Or are you saying payments on debt (mortgage payments)?