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How Much for Housing |
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I am a self-employed high net worth individual with a family. We are planning on buying a new home but I am concerned about spending too much on a new home. What percentage of gross income do you recommend going towards your mortgage (please aire on the side of conservatism?) Also, since I am self-employed I am trying to get a clear understanding of how a higher mortgage/interest will help reduce my taxes?
Thank You - Tom
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A conservative estimate is 28 percent of your gross monthly income for housing (including property taxes and insurance) and no more than 33 percent for your total debt service including things like car payments or student loans.
As for the supposed benefits of tax deduction on a higher mortgage, forget that. It's not worth spending an extra dollar in interest just to get back 28 or 33 cents in tax saving. |
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Edith
Originally published on May 16, 2008 |
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