The One Thing I Have Noticed
I work with a lot of first-time home buyers. I have the heart of a teacher. I want people to understand how to manage their money and how to buy a home — without the home owning them
Every week I get an email listing the homes going to foreclosure auction in my area. I was reviewing it and saw two homes I walk past on a regular basis, set to be sold on July 28.
This one hit me because I have been on the list. I understand the shame of being foreclosed on, and the stress it puts on you and your family while you're going through it. I also understand how and why it happens. This particular builder is very good at getting people into homes with very little down, and they help with closing costs — so the buyer brings almost no cash, and their debt payments can be high.
Buying a home is a great feeling, especially when the payment is close to what you are paying in rent, but there's a negative side. When you buy with little money down and you use Down Payment Assistance (DPA), you increase your financial risk. Why? Because you have no margin in your budget.
Here's what I mean. FHA can approve you for a debt-to-income ratio (DTI — the share of your gross income going to debt payments) as high as 56.6%. Say you're a couple making $100,000 a year, before taxes. That's $8,333 a month.
At 56.6%, you could be approved for $4,716 a month in debt payments.
But you don't live on gross income. With two kids, you'd bring home roughly 84% of that — about $7,000 a month. So that $4,716 is really 67% of what actually hits your account. For every $100 you bring home, $67 is already spent.
That leaves $2,284 for everything else. Food, utilities, gas, insurance, car repairs, everything.
It's a tough spot. No wiggle room to save, to pay down debt, or to absorb the surprise expense that always comes. And I see it all the time. When a buyer comes to me with a lower credit score, heavy monthly debt payments, and limited savings, I get nervous for them.
I don't want their home showing up on my weekly foreclosure list.
That's why I created the Gold Star Buyer program. It helps you build a strong financial foundation so you can buy your home without the stress of foreclosure. Spend six months preparing with expert guidance and clear steps. Click here to see if you're ready to start.
https://www.skool.com/messyfinancial-9536/about
Chris
I'm a licensed Florida real estate pro sharing education from my own experience, not lending or credit-repair advice. Your real numbers are a conversation with your lender.
