Debt Ratios

    Debt Ratio is a major determining factor in a customer’s ability to either refinance or purchase a new home.  The term refers to a borrower’s monthly financial obligations that are tracked on a credit report (including credit cards, car loans, mortgages with taxes & insurance) and the percentage of this figure in relation to one’s total monthly income.

    For example, if a borrower earns $5,000 per month and their minimum credit card payments, auto expense, and NEW mortgage with taxes and insurance will equal $2,000 per month, this customer would have a 40% debt ratio.

    Debt ratio requirements are not exact as they change depending on the product a customer may need, prefer, or require.  For example, Conventional Conforming loans often require lower debt ratios around 40%, but some other products such as Sub Prime Loans often will allow Debt Ratios as high as 55% of one’s monthly income. 

    When looking to purchase a new home, your debt ratio will determine the sale price for which you qualify.  When considering a simple mortgage refinance or debt consolidation the NEW payment will be used against your income then determining the debt ratio.

Types of debt that can impact your Debt Ratios include:
 

    Your Mortgage Banker at Liberty National Funding will answer any questions you may have about debt ratios and how they affect your ability to qualify for each specific product we offer.

Contact Us….

All Rights Reserved  (R)  Liberty National Funding.    |    Columbus, Ohio Web Design www.BlueLaserDesign.com