Sweep on Living 808 TV Segment - Living Akamai​

September 15, 2023

We were honored to be featured on local TV station KHON to share how Sweep Strategies provides guidance upfront to purchase real estate.  Thank you Kay Mukaigawa for this opportunity.  

https://www.khon2.com/living-808/living-akamai/living-akamai-sweep-strategies/

We covered how Sweep provides the education and ability to run numbers in order to compliment the real estate agent, mortgage lender and escrow team.   Before even engaging with this team, our company coaches clients on three major factors:

  • Affordability
  • Debt To Income Ratio (DTI)
  • Credit


Affordability and debt to income ratio go hand in hand because when you first get a pre-qualification with a mortgage lender, the general rule is the lender can only offer you a loan where the payment fits into a 45% debt to income ratio or otherwise known as DTI  This 45% DTI is made up for your current debts payments including things like personal loans, car loans, student loans, credit card payments, etc.   In addition to these payments, the DTI will have to include the new mortgage that you’ll be taking on with the purchase.  Lastly, any other payments related to housing which include property taxes, home insurance and association dues are included.   Keep in mind this ratio is based on your gross monthly income.  

An example would be if the household income is $10,000 a month gross then the total DTI would be maxed out at $4,500 a month, so the mortgage payment on the new purchase of a property has to fit into this DTI box.  This is how the pre-qualification process works from the lender’s perspective.   This does leave 55% or in our example $5,500 leftover to cover the other expenses which would include your withholdings from your paycheck like taxes, health insurance, retirement contributions and various fees.  The rest of this 55% would also have to cover your living expenses and this is where affordability comes into play because everyone has a different lifestyle, family situation, tuition expenses, etc.

It is extremely important to have a balance sheet of your finances where you take an inventory of your income, assets and liabilities to see what you can truly afford when purchasing a property to make sure that after all expenses are paid you do have cash flow and you’re not negative.  That’s why when we meet with individuals and families we update the numbers constantly in order to take an accurate snapshot of their financial health at each point in time.

The health of our credit is extremely important whether we’ve purchased real estate before or are buying for the first time.  It starts with educating ourselves about the three major credit bureaus and what goes into calculating your credit score.  Factors like credit card utilization, payment history, number of accounts, inquiries and derogatory marks all shape your credit report.  Your credit score is a moving target that constantly updates and changes.  Be aware of all the free tools that are out there to help monitor and maintain your credit because for most of us we’re going to need to take on a mortgage and your credit health is the first determining factor. 

Where Sweep steps in is our ability to assist our clients to complete that balance sheet to provide a visual representation of a client’s income, assets, liabilities, credit and cash flow.  We can then provide strategies to lower the DTI and maintain good credit to give the client the best chance to acquire the property that best fits the client’s situation.  Anytime you purchase real estate it’s such a big financial decision.  Having as much information and data in the beginning provides a piece of mind during this often stressful time.  Once a client gets pre-approved and has a property in mind, we encourage them to meet with us throughout the process so we can plug in the updated numbers.  It’s not uncommon for the loan terms and payments to change along the way, so plugging in those numbers will change the overall projection.     

Finally, when a client closes on a property we start to plan out how to pay off the mortgage quickly.  There are several reasons why focusing on paying off your mortgage is fundamental when it comes to real estate. The first reason would be for cash flow.  We all work hard trying to stretch every dollar and oftentimes the mortgage payment takes up the largest chunk of our monthly expenses.  By eliminating those payments quickly we can all breathe a sigh of relief.  We encourage everyone we meet to buy real estate when they have the ability to.  But when they’re staring at a 30-year mortgage, 360 total monthly payments, it’s hard to see the light at the end of the tunnel.  We’ve met with thousands of people, most of whom don’t feel they are fully prepared for retirement because they have to account for the monthly mortgage payment when they are in their non-working years.  That’s why knowing the best way to pay off a mortgage as soon as possible is so important. 

Another reason to pay off your mortgage quickly is because you’re building equity in your real estate assets. which increases your overall net worth.  Luckily, we provide training on how to properly pay off a mortgage in the safest and most efficient way possible. 

To discover how our Cash Flow coaching program can transform your financial journey, reach out to us now at (808) 533-4455 or drop us a message at support@sweepstrategies.com. Don’t wait, take the first step today!

Have any questions?
We're always here to help!