Before trading in your home for an even larger one, ask yourself if you are truly ready for the super-sized financial commitment and the sacrifices that often come with it.
via Wealth: A new way to look at “How much house can I afford?” | MoneySense.
There are two very different ways to answer this question. The first is the traditional way—the way the lenders and realtors answer it: Based on your down payment, income and expenses, how much can you afford to put to a mortgage each month, and therefore how much can you borrow? Lenders are incented to encourage debt because, provided you don’t default, the more you borrow, the more they make. Realtors have a similar motivation because the more house you buy, the higher the commission.
Allen LaRose 