We are rounding third and heading for home in regard to getting pre-approval for a mortgage loan. Quick recap: we’ve talked about credit, your down payment & now…The debt-to-income ratio (DTI).
What is is…
DTI is a percentage that helps lenders understand how much you can afford to pay for a mortgage each month given your existing monthly debt payments. Lenders add up those payments and add what your housing payment will be on your new home and divide it by your gross monthly income (i.e. how much money you earn before taxes).
Why it matters…
This helps your lender determine your ability to repay the loan. If your DTI is higher than the limit for your circumstances, you may not be able to qualify for that mortgage.
In fact, a high Debt to income ratio is the #1 reason mortgage applications get rejected. Most lenders typically offer loans to creditworthy borrowers with DTIs as high as 45%. Here at The ULTIMATE HOME BUYER EXPERIENCE we offer loans with DTIs of up to 50% or higher for creditworthy borrowers.
Keep in mind that the lower your DTI, the easier it may be to qualify for a mortgage. If you have some flexibility on when you plan on buying or refinancing, taking time to lower your overall debt exposure can make the mortgage process go much smoother.
There is no size fits all answer for buying or refinancing a house, but there is a way to best approach your situation to get the best possible terms and that is by being proactive.
So, if you are thinking of buying or selling a property…We have all the information just one click away…a library of educational videos, filled with information that will make you incredibly savvy inside the game of real estate & mortgage.
We welcome your partnership & look forward to working together & remember behind anything & everything that operates efficiently, there is a code…we are that code. Click below to begin your journey to home ownership