Debt to Income Ratios?
Posted by irpmi on July 6, 2007
Presenting words of truth written by a Traverse City area mortgage guru, Guy Cole of Countrywide Home Loans.
You’re meeting with your lender. All of a sudden terminology is being thrown at you left and right. Closing costs, pre-paids, down payment, assets, liabilities, income to debt ratios. You were ok up to the last one. Ratios? Now we are back in math? Lenders determine how much you’re loan amount can be based on how much you make and how much you owe, commonly called debt to income ratio’s. Example: Gross monthly income is $5,000.00 per month; therefore your housing cost should not exceed 31% or $1,550.00 including property taxes and home owners insurance. Your total debt should not be more than 42% of your income or $2,100.00. This is where you need to establish your own budget based on total expenses per month to insure you’re comfortable with the total payment that you’re being quoted. Things have a tendency to get a little scary when you’ve paid all of your monthly expenses only to discover you need to go grocery shopping and guess what? All of the money is now gone. Have fun looking for your home, the team at International Realty Plus is a great place to start.
Authored by Guy Cole
Countrywide Home Loans
(231) 941-5767 ext. 226
CMD 1261 – Traverse City, Mi
