You may need some information about Debt to income & getting a home loan. The DTI means your debt to income ratio and is one of the most important elements lenders look at when deciding if you qualify for a home mortgage
How Debt to Income Ratio Affects Your Home Purchase:
Terminology in the real estate market can make a home purchase look pretty complicated. All of the acronyms and shortcut ways of saying or explaining things which are meant to simplify more often than not just complicate what you need to know. One of those is ‘Debt to Income’ ratio’. In the interest of simplifying things, here are some insights on what this term means and how it can impact your home purchase.
Determining Your ‘DTI’
You need to find out your DTI prior to shopping for your new home, as this will quickly determine how much home you can actually qualify for, and for all practical purposes actually afford to buy.
To calculate this number, take your monthly debt payments – including any credit card, loan and mortgage payments – and divide them by your monthly gross income to get a percentage. In the event that your monthly debt is $775 and you make $3100 in income, your DTI is 25.%.
What Your DTI Means To The Mortgage Lender
The DTI is a very important number when it comes to a home loan because it enables the financial institution to determine your financial situation. A DTI of 25% leaves some wiggle room, as most mortgage lenders will allow a debt to income percentage that runs between 36-43%. In the case of the above example, this means that the most debt this person could take on per month is about $1333. While banks vary on this percentage, credit history plays an important part in the DTI that will be allowed.
Should You Pay Down Your Debt
If you have a Debt to income ratio that exceeds what your local Tooele UT lender will allow, you will need to deal with them before moving on to a home purchase. If you’re planning on buying a house in the next year, it’s a good idea to tackle high-interest debt first. However, if you happen to have a substantial sum of money saved up that you’re planning to increase the down payment on your Tooele house, it’s worth considering. Putting more than 20% down may slightly increase the ratio of debt to income percentage your mortgage lender will accept.
What Others Think Of DTI
Here are some articles written by otherreal estate professionals that offer information about debt to income ratios and getting a home loan. These lenders may not be available to make the loan on your new house in Tooele, but tips in this industry are generally universal. They may however give a different slant on the subject of loan percentages and allowable ratios.
Mar 3, 2017 … Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure …
There are many fancy terms that go along with the world of real estate,DTI is just one of them. But it’s an important one that you need to understand so you can make them work in your favor. If you need help calculating your DTI ratio and are planning to start looking for a home for sale in Tooele County Utah, It may be you may want to contact a local real estate professional for more information.
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