Debt To Income Ratio Calculator Advice Offered In New Loan Love Article
San Diego, CA (PRWEB) July 21, 2013 -- LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. Loan Love continues to offer the best advice with their new article that gives debt to income ratio calculator advice.
The article starts off by explaining: “Lenders use a lot of data to determine how much mortgage a borrower can afford. A lot of the information – notably, most of the debts you owe – is contained on your credit report. To determine your income, lenders will perform an income and employment verification by contacting your employer and also by looking at your tax returns. Once they know both – your income and your debt obligations – they compare what you owe to what you earn to determine what’s called your “debt to income ratio”- or DTI, an important tool in helping lenders determine how much mortgage you can afford (based on their own requirements and safety margins).”
The article helps those who are wondering “What is my debt to income ratio?” to easily get an estimate on both their front end and back end DTI. The article says: “There are two types of DTIs, known as front-end and back-end DTIs (some lenders may refer to them as the housing expense and total DTI ratios, respectively). Learn how to calculate your debt to income ratio and you’ll be ahead of the power curve.”
Regarding front end DTIs the Loan Love article explains: “This ratio looks specifically at potential mortgage costs, regardless of other debts you may owe. Essentially, the front-end ratio looks at how much of your gross monthly income would be used up in paying your mortgage payment, which is defined as the principal and interest on the loan in addition to real estate taxes and homeowners insurance. Although different lenders may have different acceptable safety margins, the industry standard assumes that your mortgage payment should not exceed 28% of your gross monthly income. You can get a ballpark idea of your front-end DTI by multiplying your gross monthly income by 28%, or if you have your tax returns handy (and if you’re shopping for a mortgage, you should), multiplying your annual income by 28% and then dividing by 12. The answer is the maximum front-end ratio – that is, the upper monthly mortgage payment limit for most lenders”
The article then explains about back end DTIs: “Unlike the front-end ratio, the back-end ratio looks at how much of your monthly gross income is dedicated to total debt payments, including credit cards, alimony and support, car loans, student loans and any other debt obligations in addition to your mortgage (principal + interest + real estate taxes+ homeowners insurance). Like the front-end ratio, there’s a magic number above which most lenders fear to tread; in this case, it’s 36%, which means that all your debts should not exceed 36% of your total monthly income.”
For more information on how to calculate these two debt to income ratios, please visit LoanLove.com for the full article.
Kevin Blue, LoanLove.com, http://loanlove.com/, 949-292-8401, [email protected]
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