In today’s world, it’s easy to get swept up in the convenience and entertainment of streaming platforms like Netflix. Binge-watching the latest hit shows has become a nightly ritual for many of us, but what if your Netflix habit is quietly chipping away at your ability to buy the home of your dreams? You might not think that your streaming habits could impact your finances. Still, over time, even small expenses like this can have a surprisingly large effect on your overall financial health—and your mortgage eligibility.
While Netflix might only cost you around $15 to $20 a month, it’s often not the only subscription you have. Add Hulu, Disney+, Spotify, Amazon Prime and others to the mix and suddenly you’re paying hundreds of dollars a year on streaming services alone. While this may not seem like much, lenders look at your overall financial picture when determining how much mortgage you can afford.
Many of us overlook these “little” expenses, but lenders won’t. When reviewing your mortgage application, lenders assess your debt-to-income (DTI) ratio. This is where your monthly debt payments, like credit cards and subscriptions, are compared to your income. If your DTI ratio is too high, it can negatively impact your mortgage approval or reduce the amount you’re able to borrow. Streaming subscriptions, gym memberships, meal delivery services—they all chip away at the income you have available for a mortgage payment.
Streaming platforms not only drain your bank account through monthly charges but can also lead to a more passive lifestyle that encourages overspending. How many times have you been tempted to order takeout while binge-watching your favorite series? Frequent dining out and other entertainment-related costs add up quickly and can hinder your ability to save for a down payment on a home.
Mortgage lenders consider your savings a crucial factor in approving your loan. Without a solid down payment, you could face higher interest rates and struggle to get your foot in the door of the housing market. That extra $50 or $100 a month going towards food and entertainment might seem harmless, but in the long run, it could cost you a lot more when it comes to buying a home.
Your Netflix habit might not directly affect your credit score, but failing to manage multiple small bills can lead to missed payments or accumulating debt, which can. Missed payments—even small ones—can lower your credit score, which is a critical factor that mortgage lenders consider. The better your credit score, the better mortgage rates you’ll qualify for, potentially saving you thousands of dollars over the life of your loan.
Furthermore, examining your monthly expenses closely can reveal where you might be able to cut back and free up more money for your down payment and mortgage payments. Imagine the difference it would make if you could set aside just an extra $100 or $200 a month by trimming unnecessary subscriptions and expenses. That could be the difference between getting approved for a mortgage or missing out.
Ready to see where you stand? Contact us today to start your journey toward homeownership. We’ll help you navigate the process and ensure that your spending habits don’t hold you back from achieving your dream of owning a home.
