Understanding the Debt to Income Ratio and Why It Matters
Posted by Shawn Clayton on
Prospective buyers preparing to purchase a home in Bay Head or surrounding areas sometimes focus solely on whether they can fit the payment into their monthly budget and scrape up enough cash to cover a small down payment and closing costs. But even when there seems to be enough available cash in the budget to meet a monthly mortgage payment of that oceanfront dream home, there can also be a serious debt-to-income issue capable of killing the joy of owning a home.
To understand how this relates to your specific home buying situation, speak with your lender and/or a financial advisor.
Understanding Debt-to-Income
Basically defined as the portion of the monthly household income that is assigned to meeting debt payments, most financial gurus…
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For those who have ever closed on a mortgage before, you know that on top of all the complicated ins and outs of selecting a mortgage, there is a ton of paperwork to bring in, look at, and sign. This guide can help buyers with what kinds of documents are needed and which disclosures will be received during the process.
When thinking of buying a home in Bay Head or surrounding areas, most people probably have a long list of wants for that house. The reality, however, is that it can be unrealistic to look for a home with literally everything on the wish list.
Most people know they have a credit score and that lenders, including mortgage lenders, review it during a loan process. But it is less common to fully understand how a credit score is determined, what it predicts, and how this can affect your waterfront home buying process.
When you apply for a mortgage, lenders typically look for a solid work history, good income with upward mobility, and a great credit rating. The truth is that not everyone who gets a mortgage has perfect data when they apply.
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