“Today, someone with 10% down who makes $50,000 a year can qualify for a $300,000 home purchase. That hypothetical maximum mortgage amount will plunge 18% to $246,000.”Mortgage experts have become desensitized to such numbers, but to me they look like there must be a typo. Someone earning $50,000 per year can get a $300,000 home with only $30,000 down! That leaves a mortgage of about five and a half years of gross earnings. It seems crazy for someone to dig such a huge financial hole. Dropping this mortgage size to about four and a half years of gross earnings isn’t enough better.
Rate Spy goes on to write
“This one regulation alone could shut out more buyers from the market than possibly any of the prior rule changes.”Good. I’d be horrified to learn that one of my sons made such a huge financial mistake.
I have no opinion yet about other criticisms of the government’s new mortgage regulations. However, reducing the size of mortgage people can get for a given income is sensible. As I frequently tell my sons, renting is better than becoming a slave to your mortgage payment for decades.