Why It’s Wise to Reduce Debts Before Applying for Mortgage

13 Sep

Credit.com – Scott Sheldon

Trying to secure a mortgage right now? From higher mortgage rates, to rising home prices to the contraction in buying power — securing financing, for some, can be no easy endeavor. As prices, and rates rise simultaneously, lenders will still place the weighted emphasis on "real income," or, the amount of monthly payment you can afford — as that’s what the loan is truly made against. Unfortunately, the amount of debt you have effectively chips away at your "real income." So before you try to get a mortgage, you might want to pay down your debt. Just make sure you do it the right way.

Before I delve into the specifics, here are some quick terms you need to know:

• Debt to income ratio, or DTI: Represents the total amount of monthly debt payment (including the house payment) divided into monthly income. Whenever this number exceeds 45 percent of the gross monthly income, things get tricky.

>>Read More: http://realestate.aol.com/blog/2013/09/11/reduce-debts-before-applying-mortgage/#!

Advertisements

One Response to “Why It’s Wise to Reduce Debts Before Applying for Mortgage”

  1. johnjenningsaz September 15, 2013 at 5:05 am #

    Reblogged this on John Jennings AZ.

    Like

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: