In a world where people pay $605,000 over asking price it’s not that hard to overextend yourself.  George Boelcke says the least heard four words in retail are “I can’t afford it.”  It seems that way in real estate as well lately.

Boelcke says financial freedom can only occur “when we add up the total we have to pay back (and not just the price), and refuse to stretch payments past the point of reasonable.”

In the mortgage world this means finding a house that you can afford with a 25-year amortization instead of 35-40 years.

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Increasing amortization from 25 to 40 years reduces the payment on an average Canadian ($335,000) home by $323 a month.  Yet it costs $223,200 more in interest over 25-years.