How to Figure Out if You Can Actually Afford That New Home
High inflation often translates to high anxiety, which is why many Americans are striving to lock in the cost of one of their most basic, most human needs: a home.
But with housing prices already at lofty levels and mortgage rates spiraling, many buyers may be tempted to jump in before they’re ready — or because they fear the situation will only get worse.
“There is this psychological pressure of everything being uncertain,” said Simon Blanchard, an associate professor at Georgetown University’s McDonough School of Business who studies consumers’ financial decision-making. That can make a necessity like housing feel concrete, he said.
“It might sound comforting to focus on the present and lock in this part of the budget,” he said. “The danger is you might be creating vulnerability by leaving insufficient flexibility for later.”