I have to speak up here about the DR advice. I think there have been some errors of omission here. DR says you should buy a house where the payment is no more than 25% of your take home pay AND it is a 15-year mortgage.
So it is not just a matter of the shorter term on the mortgage; by making the payment fixed at no more than a quarter of your take home he is also forcing you to live below your means. I don't think he would advise someone who can barely afford a 30-year mortgage to take a 15-year mortgage on the same house; instead he would say they need to buy less house and do the 15-year mortgage. He is basically just being very conservative. Whether or not his advice is actually feasible is another issue. In some high cost areas you simply cannot find housing that falls within those 2 guidelines. But I don't think it is bad advice to tell someone to buy less house. We live in a 1800-square foot townhouse that probably comfortably fit a family of 6-8 people when it was built in the 1920s. Nowadays it would be considered small for a family of 4. Would it kill us to stay in this house when our 2nd child is born? Definitely not.
|