One
common question every home buyer has on their minds when they first start
thinking about buying a home is how much home they can really afford.
The
answer to how much home you can afford relates to your debt-to-income ratio.
What Is Debt To Income Ratio (DTI)?
Debt-To-Income-Ratio
(DTI) is factored by adding up all of the monthly bills you are responsible for
paying every month then dividing that number by your gross monthly income.
Most
lenders want to see a DTI of no more than 40% especially since recent changes
in the mortgage industry thanks to the Qualified Mortgage Rule will make it
more difficult for some home buyers to qualify for mortgages.
Example Debt To
Income Ratio
Let’s
say you have a gross income of $120,000 per year and you have $3,500 /
liabilities each month, this means you have a debt-to-income ratio of 35%.
How to Improve Your Debt to Income Ratio
Although
it might seem difficult to lower your debt to income ratio you can do this by
paying off more of your debts or working more hours before you apply for a
mortgage loan.
Following
either of these tips will lower your debt to income ratio.
To
learn more tips you can use to buy the right home or to view homes for sale
across Bend Oregon contact the Birtola Garmyn Real Estate team by calling us at
(541) 312-9449 or click here to contact us through our website.
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