Financial Solvency & Readiness
Buying a home is often the largest leveraged transaction of your life. The question isn't just "Can I make the payment?" but "Can I survive the shock?"
- Liquidity vs. Income: Banks lend based on income (DTI), but you pay bills with cash. Prioritize your Cash to Close to avoid being "house poor."
- The Burn Rate: In the early years of a 30-year fixed loan, nearly 70% of your payment is interest, property taxes, and insurance. This is money you never get back.
- Stress Testing: Financial advisors recommend maintaining a post-closing liquidity buffer of at least 6 months of reserves.
