Written by: Corey Janoff
In this episode of Financial Clarity for Doctors, Corey and Rachelle address one of the questions clients frequently ask them. How much can we afford to spend on housing? Whether you are renting or buying, housing costs have increased dramatically and that’s a big part of the overall inflation numbers. If you locked in a mortgage at a low rate a couple of years ago, you may be sitting pretty, but for those that are renting or looking for a new place – everything is expensive! Rents increased 10-15% in 2021 and housing prices increased by about 15% from May of 2021 to May of 2022. When you pile rising mortgage interest rates on top of that, monthly payments have increased substantially.
In this episode we’ll chat about:
- Guidelines for how much of your income should be spent on housing
- Exceptions to the rule
- Separating wants vs needs
- The impact of housing costs on other parts of your financial plan
- How rising interest rates on new (and variable rate) mortgages translate to higher payments
And the best piece of advice we can give – buy the least amount of house to make you happy. Housing will likely be your biggest expense, so if you can limit that, you will have much more money to put toward other goals.