Mortgage tip: Always remember it takes $2 of income to offset every $1 of debt for a 2:1 ratio for mortgage qualifying purposes.
Ifyou want that fancy Tesla at an $800 per month,thenyou’ll need $19,200 a year in extra income or you’ll need to cut a current debt payment of $800 to balance your debt-to-income ratio.
Ifyou wantthe dream houseat $3,500 month, thenaim your debt-to-income ratio at 36%—meaning you would ideally want income at $117,000 a year without carrying other consumer obligations in order to afford this mortgage.
Exceptions to the debt-to-income ratio rule?
There are however, a few justifiable exceptions that make exceeding this 36% debt allowance reasonable. These include the following.
You know your household income is poised to go up in the near future
You will be able to cut another expense in the short term, such as paying off in full or refinancing another obligation.
Your mortgage payment will drop (perhaps via refinancing) in the near future.
You are coming into cash soon, with which you plan to make smart choices.
When you are thinking about buying a home or refinancing a home you already own, today’s borrowing choices should be based upon what the future holds, not just what’s right here in the now. By focusing on what the future holds and keeping your income as high as possible in relationship to your liabilities, you will position yourself to have an easier time qualifying for a mortgage and giving yourself for a brighter future financially.
A home is not a home because of its room dimensions or the color of the walls. It is about how you feel when you walk through the front door, and the way you can instantly envision your life unfolding there.
This is about more than real estate. It is about your life and your dreams.
Thank you for spending the time in getting me into my new home! And for putting up with apprehensive me during the process. I am happy in my new townhome and although still getting settled in, I am enjoying it. Again, thank you for your knowledge of knowing how to put it all together with selling & buying. Everything worked as you said it would!