Home Buyer REGRETS: TikTok Rants on Being HOUSE POOR

Hey, have you ever wondered what house poor looks like? I'll show you. I'm in my kid's playroom. That's right. We have a whole playroom for the kid. I'm eating pot noodle for lunch because that's what we can afford. These rants are all over TikTok and we need to talk about it. You know, I talk about homebuyer regrets here a lot. I wanted to share with you these TikTok videos that I found about people who regret buying a going to share with you my opinion on these videos and hopefully give you some good advice. And don't fret. I'm also going to share with you a couple of videos about how you can prevent becoming house poor and even get out of being house poor. So don't worry, I got you covered there. So you need to watch this video if you're in the market to buy a home so you can learn something from it and you won't have to be making a TikTok video complaining about how Let's get started. We all know that social media can be a one big giant wealth of information, which is great. And when I came across a lot of these videos on TikTok, oh my, I was getting so concerned for these people. And I'm like, you know what? I got to share this with you guys. We have to talk about this because people need to be better educated and prepared when it comes to buying their home. And I see this and I hear this a lot. People become homeowners and it just becomes a financial disaster for them. So let's get into it right now. I bought my own house. That first mortgage payment came in and I was like, oh, this is a situation. But at first you think you can handle it, right? Like, you know, what's a couple thou? What's a couple thou? I got it. But then the pipes in my 80 year old home broke immediately as soon as I bought the house. Wiped out my savings. Then another pipe in a different area of the house broke. Okay, that's, I'm struggling. Okay, I need help. Then my neighbor's pipe, it was a twin house. Her pipe broke and she didn't believe that her pipe broke, but her pipe broke on my side of the house. So all of that water that was coming down was spraying into my home. And then my water heater broke. When I tell y'all, I went from living in the lap of luxury to destitute immediately. I, oh my gosh, this blew, this blew my mind. This happens a lot. People are just not saving money to cover these emergency expenses. I'd say this a lot. I'm saying this in a lot of videos lately, where you really should have like three to six months of your income, or in some cases, some people are saying expenses. So say your monthly expenses, you want to have that amount saved in a bank account. You don't touch it until emergencies happen. So in her case, it sounds like as soon as she moved in, all of these problems happen. And that's why I say it's important. You need to have that emergency fund set up before you close on your house, even before you go shopping for a house, right? How many times have I said this? You want to save for your down payment, your closing costs, and you have to have your emergency fund. So this is a classic example of what happens. And of course, this leads to you becoming house poor. This next one is a classic example of what happens when you buy at the top of your budget. Don't buy at the top of your budget. When I bought my first home back in 2006, I bought at the top of my budget and I was house poor. I had just enough money to pay the mortgage, pay the utilities, a few extra monthly expenses that I had, and there wasn't anything left over to save. So when my water heater went out that first year, I had to charge the replacement on my credit card. When my air conditioner went out on the third year, we had to go to one of those loan places that charge you like 25% interest in order to get the $6,000 that we needed to replace that. We wasted so much money and interest because our credit cards were maxed out, making repairs and paying for maintenance, and we were getting loans on the big ticket items. So I urge you to buy a house that is below your budget so that you don't become house poor and struggle financially like I did. This is a big reason why you should not be buying what your pre-approval says you can afford. Okay, so for pre-approval saying you're approved for $500,000, try to keep that under $500,000 because like what happened to this woman here, she's went the top of her budget and then everything went awry, and now she's got a lot of credit card debt. So to prevent that from happening, you got to buy the house under what your maximum approval is for. There's nothing that sucks more than working so hard to achieve a goal like this, and to not even feel at home in my own house is absolutely heartbreaking. I worked so hard for this house, and I've been homeless before, and I should be grateful, and I am. But with everything going on, it's kind of hard to, but I'm ready and I have a mindset to completely take ownership of this house and move forward from here on out. I wanted to do everything at once, which was a big mistake. Every single house owner that I've spoken to just told me the same thing. It's a process, it's baby steps, and you're not going to get everything done in one day. Give yourself grace, just focus on the things you need to focus on, and the rest will fall into place. This is an example of biting off more than you can chew. A lot of people walk into a home and they get these grandiose ideas, I want to make these changes, I want to change the kitchen, I want to change this bathroom, I want to change the layout, the flow of this room isn't working for me, I need to change that. Okay. And people feel that it all needs to be done at once. It doesn't. This is called prioritizing your projects. And I said this in a couple of videos ago, this is what people need to be doing. You have to prioritize. Do not feel like you have to go in and change the entire house at once, like what this girl tried to do and found herself in a financial disaster. So first and foremost, you want to tackle any repairs that need to be done immediately. So if anything showed up on inspection that wasn't repaired by the prior sellers, you want to go in and make those changes first, make those repairs, because if you don't, it could lead to bigger issues. And then what I recommend is live in the house for a year before you decide to make any type of renovations. And even in that situation, prioritize. So if you want to change the bathrooms, okay, plan on maybe one year, okay, we're going to redo the bathrooms this year. And then next year we'll focus on the kitchen or we'll focus on changing the exterior of the home. You need to prioritize. Too many people feel that they had to go in and change everything about the home immediately. You don't have to do that. Live in the house for a year, really understand the quirks, the flow of the house and get a feel for what you really want the house to look like. And you can't do it in like a few days after living in the house and say, I'm going to make all these changes. It doesn't work that way. It really doesn't. At least, I mean, in my opinion, some people may disagree with me on that, but live in the house for a year and prioritize your projects. Now I want to talk to you about how people get out of being house poor. So I have a couple of videos I want to share with you. So the first one that I shared with you, the young lady who had all the pipes break and had the water heater break and the neighbor's pipe broke and she was found herself destitute. She did a follow up video to that, and she shared some tips on how she got herself out of it. I bought a house when I was 26, had a lot of unlucky things happen. And then I really struggled for about the first year. But your girl escaped the struggle. And here's how I did it. I was meticulous about saving money everywhere that I could. Instead of shopping at more expensive grocery stores like Acme, I was going to Aldi, hitting up the Aldi every time I need to go grocery shopping. I would check in and see what my parents were having for dinner. And I would go right on there instead of making my own dinner, instead of, you know, paying for some food, ordering out. Nope, mom and dad's. I made a budget in Excel and followed that thing like it was my religion. I did have some money left over for like fun things. So whatever that fun money was, I say was $100. I'm putting that in cash. And if I run out of that hundred, guess what? It's over. No more fun for me. I also left bedside nursing and went into a higher paying career. And once I was in that career for about a year, I hustled to get a promotion. A few years into owning the home, I also got married. And so I was able to share the costs of home ownership with another person. If I hadn't gotten married, I might have considered like taking in a roommate, maybe two to try to defray some of the costs that way as well. So this is just a case of adjusting your lifestyle. OK, so she created a budget and she stuck with it. She now shops at Aldi's versus going to Acme supermarkets because Aldi's is a lot cheaper. So find ways that are going to be cost effective. You can find a million ways to save money, to cut costs, to help get yourself out of that situation. Now, it may take some time. You know, it took her like her first couple of years of owning the house. She did have to kind of dig her way out of that. So she created a budget, you know, found ways to save on groceries. I mean, she went to her mom and dad's for dinner. Maybe not everybody can do that if you don't live nearby your parents. But in this case, she was able to do that. And the most important thing is, is that she was able to increase her income. Now, keep in mind, most people in their jobs, your increase is going to go up. I mean, hopefully you're going to have salary increases or you're going to get promotions. So after the first couple of years, you know, if you start increasing your income, that's going to help you a lot. And I remember this is one thing my father told me. When we bought our first house, I was very stressed out. You know, I had a good job at the time. My husband had a really good job and I was nervous about it. And that was the very thing he said to me. He goes, look, you got good jobs. You're always going to increase your salary. You're not going to take a lesser pay. You're not going to get demoted or whatever. I remember him clear as day to this day telling me that, that you're always going to increase your salary and that's going to help offset and eventually help you save more money once you get out of the initial shock of owning a home and dealing with any repairs and all the things. There is a light at the end of the tunnel is what I'm trying to say. So I applaud. I applaud this woman for getting herself out of it and figuring that out because anybody can do that. The next video I'm sharing with you, it's about preventing becoming house poor because a lot of people just aren't taking into consideration what the true cost is of owning a home. So this guy, his name is Freddie Smith. I follow him and he's always got some spot on advice. So Freddie talks about how millennials regret owning a home because now they're house poor and listen to what he has to say as to why this is happening and how to prevent it. Any millennials regret buying homes. This is why it's important for you to run your numbers so that you don't end up house poor. Let me show you what I mean. What you can qualify for and what you can comfortably afford is sometimes two different things. So if you make $100,000, the typical debt to income ratio, a lender is going to use when qualifying you is about 40%. That gives you $40,000 divided by 12 months, gives you a monthly allowance of $3,333 if you have no debt. So you could buy probably around a $400,000 house. Your payment would be around 3,300 and you would just qualify and you'd be celebrating. But the next step you must take with your family is what is your take home pay? If you make $100,000, your take home pays around what? 6,200. If your house payment without utilities or anything is 3,300, that is 53% of your net pay. This is where you're creeping into the house poor area and you don't want to be there. But I understand your frustration because you're like, Hey, I make a hundred grand. How can I find anything for under 400,000? Because back in the day, the financially responsible thing to do was to have your house payment be about 30% of your net. But if that were true for someone making a hundred K today, they would have to buy a $240,000 home, which doesn't really exist in most places. So I understand your frustration, but when you sit down with your lender, also sit down with your family, talk with your lender and look at your net pay so that you don't end up house poor and you can actually enjoy the home you're purchasing. This, this right here. I hear about this all the time. What Freddie is saying here is you got to take a look at your net income. When you're qualifying for your mortgage, you're looking at gross. You got to look at your net income. So even though they say you qualify for a certain amount, don't go by that number. Don't. You got to look at your net number. Talk to your lender, have the conversation with your lender about this and sit down with your family, like he said, or your spouse to really crunch the numbers. This is before you even start shopping for a house. Okay. You got to understand what the reality is going to be. So again, it's your net income. You have to be looking at, do yourself a favor. Don't rush into buying that home, searching for that home until you have all this figured out. And again, based on your net income, don't go by your gross income. And another piece of advice I want to give when you're pre-approved for your mortgage, they're going to tell you how much you really qualify for. Now I've had people who say they qualify for literally a million dollars, but they're not buying a million dollar home because the reality is it's going to be kind of tight. So they'll end up looking at homes priced like $750,000 or $700,000, a lot less. So I recommend that if you get pre-approved for a max, they give you the maximum amount, do not buy a house in that maximum amount now, because you're going to end up house poor. So unfortunately, look, regrets happen all the time when people buy homes, but you can find yourself out of these situations and hopefully you can start saving money again as you make more income and you find some cost savings and you can get out of being house poor and not be discouraged and hating where you live because you don't want that. So yeah, a lot of home buyers have regrets about buying homes. And if you want to know more about it, how about you check out the playlist right here, where I talk all about this, some really good information, especially if you're thinking about buying a home. Thank you so much for watching me today to get your dose of real estate reality. My name is Jackie Baker, and I will see you next time.