Say they have solid credit scores, good jobs, but have a
debt-to-income ratio of 49 percent.
Mortgage lenders look at the
debt-to-income ratio all the time.
When Renee Taylor (not her real name) of Fayetteville, North Carolina, and her husband were shopping for a home 10 years ago, a mortgage officer at the now-defunct Home Federal Savings & Loan Bank suggested Taylor voluntarily give up her 1985 Nissan Sentra to lower her
debt-to-income ratio.
Consolidation can help people with their
debt-to-income ratio if they need to go under the scrutiny of any kind of lending institution," he says.
And, my
debt-to-income ratio is higher than those profiled, particularly since I am just starting down the road to financial health and well-being at 28 years old.
Before you co-sign for anyone, insist that they calculate their
debt-to-income ratio (see formula below), since it's a good indicator of whether they have debt problems.
If a borrower selects an IO to qualify for a larger loan, their
debt-to-income ratio (DTI) will rise more than that of a non-IO product after the rate reset, all else being equal,' said Suzanne Mistretta, Senior Director, Fitch Ratings.
In addition to your
debt-to-income ratio, lenders also look at your work and credit history.
counties with the lowest
debt-to-income ratios, house prices didn't fall and the fall in consumption wasn't as dramatic.
In 2002/2003 they were offering loans in targeted zip codes that allowed people with subprime credit to obtain approval with 3 percent down with ridiculously high
debt-to-income ratios, at rates given to 'a' credit borrowers.
The lending community has made strides to improve its services and products in large part by lowering credit standards and raising allowable
debt-to-income ratios.
These loans have even higher
debt-to-income ratios than a typical high loan-to-value mortgage and a three-year subsidy buy-down that reduces the initial interest rate as much as 1.
