![]() ![]() Lay the groundwork by offering to take on extra responsibilities and proving your worth to the organization. Are you due for a raise? If so, now might be the perfect time to broach that subject. Keep in mind that extending any loan term will add up to paying more interest over the life of the loan. ![]() Do you have a large car payment? Explore what happens if you refinance that loan balance into a longer-term loan to lower monthly payments. Extend loan payment terms to have lower monthly debt obligations.When you make a larger down payment, you can reduce the total loan amount and consequently your monthly mortgage payment. Lowering your housing budget is a fast way to decrease your DTI through a lower mortgage payment. List all current debt, and determine which contributors to it are most expensive each month and what you can reasonably pay off. Do you have two car payments? Would you consider selling one car and paying cash for a less-expensive car? Paying off debt can help you decrease your DTI. If your DTI ratio is too high, you can use a few strategies to lower that number and make it easier to qualify for a home loan. MAF Widget How can I decrease my debt-to-income ratio? But don’t worry there are steps you can take to reduce it. If your lender requires a DTI of 36%, this ratio is too high. Divide this by $6,600 to get a DTI ratio of 42%. For example, let’s say that your total debt, including the new mortgage, is $2,800. Your total gross monthly income would be $6,600.Ĭalculate your debt-to-income ratio by dividing your total monthly debt by your monthly household income. For example, let’s say that you earn $3,000 per month before taxes and your partner earns $3,600. Add up the total amount that you and any co-borrowers earn before taxes. Include your estimated mortgage amount, car payments, credit card payments, student loans and other financial obligations. Calculate your debt-to-income ratio by gathering two pieces of information: your total monthly gross income and your total monthly debt. Many prefer to see a ratio no larger than 36% however, some will allow a ratio between 40% and 50%. Lenders use a debt-to-income ratio to determine the mortgage amount you can afford. How do lenders decide how much I can afford? ![]()
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