Millions Spent Half of Income Just to Pay Mortgage

September 23, 2008 No Comments »

expensive

Unaffordable mortgages continued to plague American households in 2007, according to a U.S. Census Bureau report released Tuesday.

Last year, 38 percent of homeowners with mortgages spent 30 percent or more of their income on mortgage payments, the limit the government considers affordable.

And more than 7.5 million people, or roughly 15 percent of American homeowners with a mortgage, spent half of their income or more just to pay the mortgage each month.

That figure is up from 7.1 million a year earlier, a clear sign home prices had become far too expensive, despite slapdash efforts to control costs with adjustable-rate mortgages and option-arms.

In the Miami-Fort Lauderdale-Miami Beach metro area, one of the harder-hit foreclosure hotspots in the nation, 29.1 percent spent half their income on the mortgage and 58.2 percent spent 30 percent of their income.

In Stockton, CA, 28 percent of homeowners spent half their paycheck each month to cover housing costs, while more than a quarter of homeowners in Los Angeles County and surrounding areas did the same.

These figures far exceed mortgage lender-recommended debt-to-income ratios, exposing the loose lending practices of the last few years perpetuated by stated income loans and negative amortization products.

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