Spending half your income on housing? You’re not alone

A sign of good fiscal health is if you’re paying less than 30 percent of your monthly income on your housing costs.

BusinessWeek recently ran an interesting story about homeowners who are paying a whopping 50 percent — or more — of their monthly incomes on mortgage and other housing payments. You can read the story here.

The BusinessWeek writers interview a homeowner who only eats out on certain days of the week, days of the week when McDonald’s offers 49-cent hamburgers. You might argue that such a homeowner — who is facing near certain foreclosure of his residence — shouldn’t be eating out at all. But when life’s such a struggle, why begrudge someone a 49-cent hamburger?

To see so much of your income gobbled up automatically each month must be extremely painful. I don’t know who’s at fault when a homeowner is saddled with mortgage payments that are far too high for them. I suspect it’s a bit of everybody involved in the real estate transaction: the borrower, the mortgage lender and the real estate agent.

There was a time when people relied on their home’s appreciation to get them out of such dilemmas. They figure their home’s value would rise fast enough to allow them to make a quick refinance of their mortgage loan. I remember back during the housing boom seeing homeowners refinance their mortgage loans less than three months after they moved into their new residences.

That’s not happening today. Today, if you’re buying a house you have to be fiscally responsible. In fact, as you look at the financial mess sweeping the country, it looks like we’re all going to have to learn to leave within our means again. The days of the housing industry providing everyone with artificial wealth are over.