Budgeting is an important aspect of home ownership. How do you know exactly how much house you can afford? Here is how to evaluate your income to be sure you qualify.
Many financial advisors will tell you that your debt-to-income ratio should be less than 36% of your income. How do you calculate your debt to income ratio, and what does it mean?
The term “debt-to-income ratio” gets thrown around in the financial world quite often; the ratio is simply the amount of your monthly bills against your income. Calculating your debt to income ratio is simple. First, calculate how much money you bring in per month. Next, calculate the amount of your monthly debt obligations.
Include your credit cards, automobile payment, child support, student loans, and any other monthly debts you pay including the amount of the mortgage you are considering.
Lastly, divide the sum of your debts by the total of your monthly income. Most creditors do not want this ratio above 36% in order to approve your mortgage application. If you are above this amount try paying down credit cards to lower your debt-to-income ratio. Once you are under 36% you should not have a problem qualifying for the mortgage.
To learn more about qualifying for the right mortgage sign up for a free mortgage guidebook at RefiAdvisor.com using the links below.
Albuquerque Mortgage Refinance
Louie Latour has twenty years of experience in the mortgage industry as a mortgage broker. He is the owner of Mortgages Refinance Advisor, a mortgage help site devoted to saving homeowners money with a free guidebook “Mortgage Refinance: What You Need to Know.”
Sign up for your free guide today at: http://www.refiadvisor.com
