NORTH DALLAS REAL ESTATE

Debt to Income Ratio

 

 

 

Your Debt to Income Ratio.............What is it?

Your debt to income ratio is a method of determining how much money is available for your monthly mortgage payment after all your other recurring monthly debt is paid. There is generally a debt limit associated with each type of loan, such as a 28/36 qualifying ratio for a conventional loan. These qualifying ratios are guidelines. Qualifying for a mortgage loan even when your debt load is over the limit can sometimes be made up with an excellent credit history. Simply put your credit is gold. Deciphering the qualifying ratio formula. Conventional loans typically have a qualifying ratio of 28/36. FHA loans will sometimes allow for a higher debt load of 29/41 qualifying ratio. The first number in a qualifying ratio is the maximum percentage of your gross monthly income that can be applied to mortgage. That includes the loan principal and interest, private mortgage insurance, property taxes, homeowners insurance, and homeowner's association dues). The second number is the maximum percentage of your gross monthly income that can be applied to housing expenses and recurring debt. Recurring debt includes monthly payments for cars, boats, motorcycles, child support payments and monthly credit card payments.  Example:  of a 28/36 qualifying ratio: Gross monthly income of $3,500 x .28 = $980 can be applied to housing. Gross monthly income of $3,500 x .36 = $1,260 can be applied to recurring debt plus housing expenses                          Example: of a 29/41 qualifying ratio: Gross monthly income of $3,500 x .29 = $1,015 can be applied to housing. Gross monthly income of $3,500 x .41 = $1,435 can be applied to recurring debt plus housing expenses  These are guidelines. To find out if you can pre-qualify for a loan, and determine how large a mortgage loan you can afford, call you local mortgage company or one of the companies provided on this website and chat with a loan officer. Keep one thing in mind..........Your credit score is one of, if not THE most important piece of information when you are trying to get any loan. If you are ready to buy a house and want to shop around for the best lending deal.........Do all your shopping within 14 days. Inquiries on your credit usually drop your score 5 points each time it is checked for any loan related reason. During the 14 day period the credit reporting agencies will allow a potential home buyer the opportunity to have their credit pulled multiple time without deducting for more then one check. After the 14 days it will start again. Can you see where this information can come in handy if your credit score is already marginal.

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 We serve Allen, McKinney, Prosper, Frisco, Plano, Lewisville, The Colony, Sachse, Wylie, Murphy, Richardson, Carrollton, Flower Mound, Coppell, along with many other areas around DFW.

Frisco foreclosures offer a tremendous amount of value and can save the buyer thousands.

           NORTH DALLAS REAL ESTATE