22 07, 2020

Debt-to-Income Ratio

2021-09-28T16:49:55+00:00July 22nd, 2020|Blog, General, Mortgage 101, Tips & Advice|

When you’re preparing to buy a home, you will begin to look at your credit score and your income to make sure that you can be approved for the best interest rate and the loan amount you desire. But something you may not be thinking about is your debt-to-income ratio and how it could be affecting your credit score and the overall willingness for lenders to allow you to borrow money for your mortgage.

What is Debt-to-Income Ratio?

Debt-to-Income (DTI) ratio is the percentage of your gross monthly income that is spent on monthly debt payments. The payments would include anything from rent to credit cards, student loans, car payments, mortgages or even child support. The lower your DTI, the more likely lenders are to approve your loan. The ideal DTI is 40 percent or lower, however each situation is different and you can still be approved with a DTI of 45% or higher. Your loan officer will do what they can to get you approved regardless of your DTI so if that is your only concern, you still have a good chance of approval.

Calculating Debt-to-Income Ratio

Calculate your DTI by adding up your recurring monthly debt obligations, such as your minimum credit card payments, student loan payments, car payments, rent or mortgage, child support, alimony, current or projected property taxes, homeowners’ insurance and personal loan payments then divide this number by your monthly pre-tax income. In cases where it applies, factor in Homeowners Association fees or condo dues. To get the percentage, you usually just multiply by 100.

How to Lower DTI

Since a DTI of under 36 percent is desirable, taking steps to get your DTI lower may be needed before you start trying to get a loan. To improve your debt-to-income ratio, try to make more than the minimum payment on credit […]

14 07, 2020

Condominiums vs Townhouses

2021-09-28T16:49:56+00:00July 14th, 2020|Blog, Buying a home, General|

Many families have decided that they desire a home that may be outside the typical “American Dream” meaning instead of a single family home, some potential homeowners prefer condominiums or townhomes when choosing their future home. Often, these terms are used interchangeably but there is a distinct difference between a condo and a townhouse and knowing the difference can be helpful in choosing the type of home you wish to purchase.

What is a Condo?

If you purchase a condo, you are essentially purchasing the interior of a unit in a building while the hallways, common areas, building exterior and land around it are commonly shared by the community and cared for by another person or company, typically the homeowner’s association. Whether the building is an apartment-style or a home within a larger residential area, the idea is the same—you own the inside and the rest is someone else’s responsibility and property.

What is a Townhouse?

Purchasing a townhouse is similar to purchasing a single family home in the sense that they typically have some sort of yard and are usually multi-level. Purchasing a townhouse comes with the responsibility of caring for the interior, exterior and land the home sits on. Additionally, townhomes are usually grouped together and still attached to another building which often means there is still an HOA responsible of overseeing the entire community as a whole. An HOA can have guidelines that homeowners must follow, although you own your property.

Cost Difference Between Condos and Townhouses

When looking to be preapproved for a mortgage, you will receive advice about not purchasing more home than you can afford. When it comes to cost, you can sometimes afford a townhouse or condo over a traditional single family home for the simple fact that you are buying less square footage. So, a first-time buyer or […]