Mortgage Broker Santa Monica | How Your Debt to Income Ratio Can Affect Your Mortgage
What are your credentials?
Mortgage Broker Santa Monica – I am the Founder of Mortgage Broker Santa Monica, a licensed mortgage broker, and real estate agent. We are a specialist in helping buyers and sellers with homes for sale in Westside, Los Angeles, California, and specifically homes for sale in Santa Monica, CA, and houses for sale in Beverly Hills, CA.
What is DTI or Debt to Income?
When it comes to mortgages, one of the most important factors is your debt-to-income ratio. This ratio compares your monthly debt obligations with your monthly income and is a key indicator for lenders when evaluating you for a mortgage loan. Your debt-to-income ratio can also affect the type of loan you qualify for, what terms are available to you, and even the interest rate on your loan. It is important to maintain a good balance between your debts and income so that you can qualify for the best possible mortgage rates and terms.
How does DTI impact a mortgage application?
Your DTI dictates if you will qualify or will be approved for a certain loan amount. If your DTI ratio does not meet the requirements for that loan product/type and lender then you will not be able to qualify.
What DTI requirements do lenders use for different types of home loans?
DTI requirements vary for each loan product, loan type, and lender. Please seek out the help of a mortgage broker to help you find out what your DTI is and what product and lender is best for your specific needs and goals.
What steps can borrowers take if their DTI is too high but they still need a home loan?
You can take either an offensive strategy and increase your income.
3 options you have to increase their income amongst others are:
- Add a co-signor or co-signors
- If you have the cash you can put that money into a trust and have that money be distributed to you monthly to use as an income source
- Buy a property with a DSCR loan to take advantage of rental income
A defensive strategy would be to focus on consolidating and eliminating your debt.