Instinctively I know I must have misread or misunderstood something, but...
"$4000 a month is about twice the amount it takes to pay for my entire family’s living expenses. It’s also enough to pay the mortgage on a $900,000 house, "
How does $48000pa pay for a $900,000 mortgage? Old skool was 3x your income. Pre-crash, 5x was possible. This is 20x (ish).
This: You are using the "what should my income be for banks to give me a mortgage" figure, not the "what does a mortgage cost" figure. At 5% interest, a mortgage on $900,000 costs $45,0000 a year on interest.
That depends on the type of mortgage. At least in some countries, you can/could get a mortgage where you do not pay anything back, the idea being that increasing house prices and inflation would, together, lead to a situation where total mortgage debt is much larger than the worth of one's house.
Taxes are high on this one, but in most places you're going to pay a lot of taxes on a 900k house.
You are on the money with 3x income being what you can realistically spend on a house without getting yourself in trouble.
A later poster says this is a mistake because it's what banks use, not what you can afford, but the banks historically used that number because it is what a person can reasonably afford. Way back when banks actually had to eat a loss on a bad loan, they knew who to loan to.
That amount of money would pay the mortgage (and nothing else) on a 30-year loan on a $900,000 house in the place where he lives, given a 20% down payment:
http://www.zillow.com/homedetails/2012-Coralbells-Ct-Longmon...
It wouldn't pay for anything else. He's just giving it as an example of what that amount of money can buy.
"$4000 a month is about twice the amount it takes to pay for my entire family’s living expenses. It’s also enough to pay the mortgage on a $900,000 house, "
How does $48000pa pay for a $900,000 mortgage? Old skool was 3x your income. Pre-crash, 5x was possible. This is 20x (ish).
What blindingly obvious point have I missed?