Quote:
Originally Posted by tripods68
I completely disagree on DR on this comment. We bought our house about 5 years ago with debt/income ratio 43%. Today, our debt/income ratio stands at 21%. DR doesn't take any account that income generally go up over time.
|
That can be true, but isn't always true, so you need to consider your individual circumstances. When we bought, I was in the first year of a 3-year employment contract. I knew exactly what was going to happen to my income. It was going up 10% the 2nd year and another 10% the 3rd year plus there was a productivity bonus on top of those base raises. So we could spend a bit more on the house knowing that our income would be rapidly rising.
If I were buying today, however, the situation would be different. My income has been flat for about 5 years and I don't anticipate it changing anytime soon, so I wouldn't be stretching to buy because I know my income won't be rising.
Overall, I would tend to agree with DR on this one. You should buy based on your current circumstances, not what you think your circumstances might be in 3 or 5 or 10 years because that is always subject to change. For example, one spouse might decide to stay home to raise the kids (which is what my wife did less than a year after we bought our home).