Your debt to income ratio is like your first impression on a date: its a key factor for a lender to decide whether or not to grant you approval for a mortgage or a loan. If it's too high, you'll be looking for another date with a lender.
But don't worry, this ratio is not complex and it is easy to understand and calculate. Your DIR is the ratio between how much you owe each month on personal debt and how much you earn.
Here are certain things to consider as expenses for this calculation:
Take that total amount and divide it by your monthly gross income. Don't forget to include your spouse's income after taxes.
Better yet, use our FREE Debt to Income Ratio Calcultor and get your ratio fast!
When shopping for a mortgage, it's good to shoot for a ratio of 36% or lower. Anything over that figure will almost guarantee you denial of credit or a higher mortgage interest rate. This could hinder your attempt to pay off your mortgage early (which we don't suggest you do anyway). But the lower the interest rate, the better.
Experts also suggest that no more than 28% of your monthly gross income go to paying housing expenses (mortgage payments, private mortgage insurance, homeowners insurance, property taxes).
There are a couple of ways to go about this. One strategy is paying off debt.
A way to increase income and enjoy it at the same time is learn how to earn or make online money. You can earn a substantial amount of income providing information about your passion to an audience online.
SBI helps us do this everyday. What's great about SBI is that you don't have to be an Internet marketer, a prolific writer, or even Internet savvy to succeed online. Just bring your passion and knowledge...and SBI will help with the rest.
(Read some Site Build It Reviews.)
Whether you use our debt reduction strategies or take measures to increase income, or both, take steps to get your debt to income ratio within the recommended percentages. Use the tools we've given you to make the changes.
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