Why you should care about your DTI

Can you afford it – or not?

This is the story told by the DTI ratio – debt-to-income ratio.

It is a calculation that compares the ratio of your loan payments to your income.

The DTI has two parts – the front-end ratio and the back-end ratio (more on those tomorrow, in the meantime, see more here).

The front-end and back-end ratios are used by lenders to help decide if they will approve you for your new mortgage loan.

Lenders care about DTI, the debt-to-income ratios – and so should you.


You want to know if you can really afford this new loan.

Will it be a benefit to you – or will you regret it because you couldn’t really make the payments?

Or will you make the payments, but it’s still not good for you?

These debt-to-income ratios can help you decide.

And when you choose who to work with for your mortgage, you need that person to help you decide.

A typical run-of-the-mill loan officer won’t care about you – only about the commission check when the lender approves the loan.

And the reality is that lenders could approve loans with a debt-to-income ratio that isn’t good for you.

They have decided it is good for them – but you really need it to be good for you.

A real mortgage consultant like me will look out for you – and help you be confident your new loan will really be good for you, not just good for them.

And why does it matter?

A loan with debt-to-income ratios that are too high will make that new mortgage payment and that new house a curse for you, not a blessing.

When your mortgage payment is too high, here’s what it can do to you . . .

Maybe you won’t be able to make the payment.

You would have to make a choice between paying the mortgage or paying your other bills. Not enough money for both.

Then you have the stress of phone calls, letters, demands for payment from the lender.

Making your days a living agony.

Then foreclosure, packing and moving. And where will you go?

It’s no good. Who wants that?

Or maybe you can make the payment and all your other payments – just barely.

Which means you’ll never get ahead.

You’ll never be able to pay off this loan early.

You’ll never be free of slavery to lenders.

You will give them many thousands and thousands of dollars over the coming decades – money you have to work for.

You’ll do the work – they’ll get the money.

How will you even enjoy the house while you’re doing all that work for them?

Choose a typical run-of-the-mill loan officer and you could end up there – in perpetual slavery to lenders.

All because they didn’t care to help you make the right choice on your DTI, your debt-to-income ratios.

On the other hand, choose a real mortgage consultant like me and together we’ll talk about a debt-to-income ratio that make sense for you.

To help you choose the right house that can be a blessing for you, not a curse.

To help you be able to pay off that new loan, and all your other loans, typically in about 5 to 10 years on your current income, and potentially become a millionaire in the same time you would have normally paid off a 30-year loan.

This is what it’s all about.

That’s the difference.

It’s a day-to-day, real life difference. Not just some abstract number.

That’s why your DTI is so important – and why you need to care.

Your real mortgage consultant will help you care.

A perfect credit score

You will probably never have a perfect 850 credit score.

Neither will I.

In fact, I don’t know anyone who has a perfect score.

Except one person who claims to have had a perfect score at least once.

He wrote on the MoneyTalksNews site here.

We can come close.

A perfect credit score will be the result of a long history of good financial habits.

I’ll probably never have that perfect score because I didn’t always have those good habits.

Although now that I’ve learned what to do – and what not to do – I have a score considered to be in the excellent range, around 810 to 820.

I say it’s a range because a credit score is never fixed at one number. Credit scores are like a snapshot of a moment in time. As data constantly comes in, the credit bureau recalculates the score.

Credit Score - What is really the perfect number?

Even the author of this article had only a fleeting experience with the perfect 850 score.

(Check here for tips to raise your credit score.)

More importantly, though, are the habits that got him there, very similar to the same habits I teach – the habits that I learned the hard way.

Such as . . .

Never borrow to buy things that go down in value.

Think about what people buy and put on credit cards, for example . . .

A restaurant meal. It goes down in value. In fact, it has no value at all once you’ve consumed it.

Movie tickets. Once the movie is over, no value.

Groceries. Again, same principle. Consumed and gone.

Books. DVDs. You only need to see the truth in this by visiting a garage sale or second hand store. Purchased at full price, on sale for a fraction.

Or think about a car loan . . .

How many cars do you know that go up in value?


Maybe a collector antique – but that’s not what we’re talking about.

Buying a car with a car loan – especially a new car – is totally the way to financial failure.

New cars lose half their value in the first two years. Why would you borrow money to let that happen to you?

Car loans can often be $300 to $500 per month.

So expensive.

The only purchase we should even consider borrowing money for is a house.

Even then, it’s best to avoid a mortgage if we can.

The reality is, most people need to borrow money to buy a house.

But then their mistake is that they do not make and follow a plan to pay it off quickly.

That mortgage could be paid off in as little as 5 to 10 years if they know what they are doing and follow the plan.

Simple common sense habits like this are what lead to a great credit score.

Maybe we’ll never have a perfect credit score – it can be great.

And you can be on your way to true financial freedom.

Using coffee to become financially free

Typical Americans can become financially free, including their mortgage, usually in about 5-10 years on their current income – if they know what to do and they do it.

You could too!

And coffee could help you.

This idea was mentioned by a New Zealand mortgage website, and it’s worth passing along to you.

What you do about coffee can help free you from mortgage payments and could potentially help you become a millionaire with financial freedom in the same time you would normally pay off a 30-year mortgage.

Think about it.

If you make a habit of stopping in for your morning coffee every day, or even some days, think about how that $3 to $5 each time adds up.

Even a simple daily $3 coffee from the coffee shop adds up to costing you an extra $20,000 on your mortgage. Make it a $5 daily coffee and that costs you $30,000.

Am I saying to give up coffee?

Not necessarily.

What could a little change in your daily habits do for your potential financial freedom?

Could you cut back to just once in a while, instead of daily?

Could you make it at home and bring it with you?

How could you apply this idea to other habits?

Each small changes can add up to have massive results.

It could be the difference between being a financial slave to lenders for the rest of your life, or potentially becoming a millionaire with financial freedom in the same time you would normally pay off your mortgage.

Make a few short term adjustments and gain a major long-term benefit.

It’s your choice.

Your future.

And your life.

Make the choice to be wealthy.

Let me help. I’d love to help however I can.

Cash – the best way to financial freedom

As a real mortgage consultant, I believe that the best way to buy and own a home is with cash.

Ironic, isn’t it, that I arrange mortgage financing for people, yet I believe that we should own our homes without a mortgage?

That’s what sets me apart as a real mortgage consultant from a typical run-of-the-mill loan officer.

Unfortunately, the reality is that most people cannot afford to buy a home with cash. If they had to wait to have the cash, they may never own a home.

So, the next best thing is to buy the home with mortgage financing, then pay it off as quickly as possible.

Mortgage Home Loan Calculator - Using Cash to Become Debt Free

That is why I became a real mortgage consultant, to help you with a loan for one of the biggest financial transactions of your life, buying a home, and helping you to do it the right way. Then helping you on how to become financially free.  

See more here, here, and here.

On the other hand, a typical run-of-the-mill loan officer is only interested in getting the loan closed, collecting the commission check, and moving on to the next person, probably forgetting you even existed. Never mind helping you buy and finance the home the best way for you, then staying available to help you even after the loan closes.

With that in mind, I found this article that gives the “5 reasons not to purchase your home with cash”.

One reason this article gave to get a mortgage is to keep some liquidity – in other words, to keep some cash on hand.

I agree that liquidity is important, and you do not want to run yourself short of cash. What I teach will help you have plenty of cash, sooner and more of it than 95% of the population.

The article says that if you qualify for a mortgage, then you should get a mortgage. It says that people are more comfortable now taking on debt than they used to be.


That’s like saying people are more comfortable with slavery today than they used to be – because that’s what being in debt is like, slavery to lenders.

The article says your money may be better invested elsewhere. I disputed that idea in yesterday’s email.

There’s more but I think you get the idea.

Owning your home free and clear, with no mortgage, is the best way.

But you will probably need the mortgage loan to buy your home. Most people do – and it’s okay, for now.

Let me help you do it the right way – then show you how to pay it off quickly, plus all of your other loans – so you can be part of the 5% of people who succeed financially, not the 95% who fail.

Put your money into your best investment

As you may know from following my emails or working with me as your real mortgage consultant, I advocate paying off your mortgage quickly, often in as little as 5-10 years on your current income.

Bloomington mortgage - make the most of your investment

That is the best way to be financially successful – even when interest rates are going up.

However, I came across an article that says you shouldn’t pay off your mortgage early when interest rates are rising.

I actually do have a point of agreement with this article.

For example, it says that you do not want to pay off your mortgage until you have paid off your higher interest debt, such as credit cards.

Of course, I agree with that.

What I teach my customers is that the typical family can pay off all of their loans and become completely free of all loan payments, usually in as little as five to ten years on their current income, including their mortgage.

Focus on one loan at a time, pay it off, then move on to the next one.

The mortgage is usually the last loan to pay off.

Credit cards will usually be first.

So, yes, start by paying off higher interest rate credit cards first – then pay off the mortgage.

One point where I disagree with this article is where they say that you want to keep your mortgage and use that money to invest in higher-return investments.

That advice ignores one very critical issue.

You are not comparing “apples to apples” – or, in other words, you’re not comparing the same types of investments.

Even though you can potentially earn more in, for example, the stock market, it comes at a higher risk. You could also easily lose that money.

The potential higher return comes with a much higher risk.

On the other hand, paying off your mortgage is safe, and it is a guaranteed return on your investment.

As a real mortgage consultant who is educating my customers that following the traditional advice of a typical run-of-the-mill loan officer is not the best way to financial freedom, I show how to use the right plan effectively.

Follow the advice of most people and you will end up where most people do, part of the 95% of people who fail financially.

Do what the 5% who succeed do, and you can be financially successful too.

The danger of debt consolidation

It’s a common method of dealing with debt . . .

Debt consolidation . . .

Taking all or most of your unsecured loans, paying them off by consolidating them into one payment . . .

Turning a bunch of payments into one payment . . .

One payment that is smaller than all the separate payments combined . . .

Very attractive, and seductive . . .

And dangerous.

This article gives some good information, and some not-so-good information, on debt consolidation.

Debt consolidation can be a helpful tool to help you pay off your loans more quickly than you otherwise could . . .

If it is used the right way . . .

But most of the time it is used the wrong way.

A typical run-of-the-mill loan officer will sell it as a quick, “easy” way to reduce your monthly payments . . .

But this typical run-of-the-mill loan officer never coaches, guides or teaches you how to use this consolidation . . .

How to use this combining of payments into one lower payment, to your advantage.

Instead, the typical run-of-the-mill loan officer sells a debt consolidation refinance of your mortgage, gets you a lower payment, closes the loan . . .

Then leaves – leaving you with nothing but a new lower payment . . .

Which is great as a first step . . .

But it’s not enough.

Here’s the reality . . .

And deep down you probably already know this . . .

What are most people likely to do with those credit cards that now have a zero balance?

Sure, you know the answer . . .

Maybe you’ve done it yourself . . .

That’s right . . .

Charge them back up again!

So, what’s happened?

Now you have a higher balance on your mortgage . . .

And you have new balances on your credit cards!

That’s not how this is supposed to work . . .

But that’s how it usually does work when you let a typical run-of-the-mill loan officer do a debt consolidation refinance on your mortgage.

The typical run-of-the-mill loan officer only cares about doing the loan to get the paycheck from the commission, whether the loan was really right for you or not.

I have a lot more to share about debt consolidation, which I will discuss in future articles . . .

Such as . . .

How a real mortgage consultant would handle a debt consolidation loan the right way . . .

So that it becomes a tool to propel you forward to financial freedom, not drag you deeper into debt . . .

Other types of debt consolidations that are out there . . .

So that you can be fully informed and beware of getting into something that you may regret later . . .

When debt consolidation may not be right for you . . .

And some of the dangers of debt consolidation . . .

So, stay connected and I’ll help you really understand debt consolidation . . .

How it could hurt you . . .

How it could help you . . .

And, either way, how you can become part of the 5% of people who succeed financially . . .

Not the 95% who fail.

As always, it starts with your making the wise choice to work with a real mortgage consultant, not a typical run-of-the-mill loan officer, see the difference here.

Is 20% down dead?

The standard mortgage down payment has traditionally been 20% . . .

Unfortunately, it’s a tough standard to meet for most people.

As noted here, more than 70% of first-time buyers have a down payment of less than 20% . . .

And 54% of all buyers make less than a 20% down payment.

Down payments can be as low 3.5% to 0% depending on the loan program.

Of course, the ultimate goal is to have a 100% down payment.

So, while the 20% down payment may not be dead as this article claims, it is a great goal to make the 20% down payment dead in our own lives.

See that here.

When you are part of the 5% of people who succeed financially, a 100% down payment can be a reality.

How do you get there?

It begins be deciding it is possible, and that you will do it.

Here is some help to decide:

“Money – make yourself wealthy”

“Cash – the best way to financial freedom”

“Your first new opportunity”

Once you decide, then set up your plan to get going:

“You need a totally new opportunity”

“Using coffee to become financially free”

“Win by conquering your debt”

“Take action with your annual review”

“The power of secret money”

“Live like you’re broke”

“What did that dinner really cost you?”

Then, once you get that part in place and you’re making great progress, now look at how you can accelerate your progress:

“Win even faster!”

“More new opportunities for you”

This is what can help you make a small down payment and the 20% down payment dead in your life.

You can really reach a point in your life where a 100% down payment is possible!

You can really become part of the 5% of people who succeed financially, no longer part of the 95% of people who fail.

You can potentially free yourself of all your loan payments, including your mortgage payment, in as little as 5-10 years on your current income.

You do have the potential to become a millionaire in the same time you would typically pay off a 30-year mortgage.

This million dollars could pay you $11,000 per month in interest income, without your ever having to go to work.

It’s called residual income – income that comes in automatically whether you work or not.

That’s what the 5% of people receive – money works for them.

The 95% work for money.

Down payments, 20% down or as little as 3.5% or 0% down, are the reality in the lives of the 95% who fail.

The 20% down payment can be dead in your life – that day of a 100% down payment can be a reality for you!

Let a real mortgage consultant like me help you!

Declare your independence!

It’s a choice most people never make – and they never even think about . . .

They just do what they’ve always done . . .

What almost everyone else does . . .

Trapped in a treadmill life of endless loan payments . . .

Rushing to and from work every day . . .

Working for someone else . . .

Their time committed to the job . . . and the boss . . .

Not able to make their own choices . . .

Being servants . . . slaves . . . to work, and to money . . .

Working for money, instead of making money work for them . . .

Is this you, too?

Then declare your independence!

That is the first step to freedom . . .

Just as the Declaration of Independence was our country’s first step to freedom . . .

Our country still had to fight a war and do the work of making it become a reality.

Declare your own financial independence, fight your own war against the culture and . . .

This is what financial freedom looks like for you . . .

No loan payments at all – no credit cards, no car loans, no student loans, no mortgage payment . . .

Use all the money that would have been wasted on loan payments and invest it to build your wealth . . .

Have the potential to become a millionaire in the same time most people pay off a 30-year mortgage . . .

Receive a possible residual income of $11,000 per month – every month – without ever touching the million dollars . . .

Then the million dollars generates that income month after month . . .

And you don’t even have to go work to receive it . . .

You’re making money work for you instead of having to working for money . . .

You can do what you want to do . . .

Be self-employed in your own business . . .

Travel to places you’ve always dreamed of seeing . . .

Volunteer for worthy organizations, and help people . . .

Spend more time with your family . . .

This is what financial freedom looks like . . .

And this freedom can be yours . . .

Declare your independence today . . .

And make it yours!

See more here . . .

“Money – make yourself wealthy”

“Who are you making rich?”

“Freedom, Imagine it!”

“You can have financial freedom”

“Put your money into your best investment”

“Using coffee to become financially free”

“Win by conquering your debt”

“Would you regret paying off your mortgage?”

“What did that dinner really cost you?”

“Is this habit bringing you success?”

“Do you win? Or lose?”

“This one habit makes you a loser”

“Evidence of financial failure is all around you”

“Win even faster!”

“Do you really know what you’re doing?”

“Down the drain”

“The worst thing you can do”

“Live like you’re broke”

“Your best investment”

“The power of secret money”

“Who is on your team?”

What you really need to know about your home’s value

Do you know your home’s value?

Chances are you don’t . . .

Even if you think you do.


Probably because you have visited one of those online home value websites . . . you entered your information . . . and it produced a value estimate of your home.

Most likely it is wrong.

And there are many reasons it could be wrong . . .

I go through those reasons – and show you the best way to get a trustworthy home value in my special report, “How to Get Your Home Value” . . .

You can get your copy here.

Now there is a new website that claims it can provide you with your home value, and it can also help you spend your remaining home equity by borrowing against it.

See that here.

There is so much wrong with this concept it’s hard to know where to begin.

As I mentioned already, you can’t get an accurate home value from a website.

Computer algorithms cannot possibly account for every variable that goes into determining the real value of your home – certainly not like a real person can do.

Get my special report that shows you how to get an accurate home value.

This site tries to get you to borrow your remaining home equity.

This is so wrong.

It is moving in the exact opposite direction of where you want to go.

The 95% of people who fail financially would fall for the idea that they need to borrow the full amount of their home equity . . .

Continuing them down the path of financial failure.

The 5% of people who succeed financially know that they will achieve financial success by paying off their house completely, then taking that same money they were wasting on loan payments and invest it instead, potentially paying off that mortgage and all other debts usually in about 5-10 years on their current income.

That’s the path to true financial freedom!

This site directs you to shop for your mortgage based on interest rate and fees . . .

As I’ve discussed many times (see one here with links to more), this is the absolute worst way to get mortgage financing . . .

Yet most people believe that is how it should be done . . .

Because that is what they have been led to believe by the culture . . .

Remember, these are the people and a culture that is doomed to financial failure, the 95% of people who fail financially . . .

You will be wise to do the opposite.

So, don’t look for lenders to “compete for your business” based on interest rate and fees. That’s how you lose . . .

Instead, you need a real mortgage consultant who will still have competitive rates and fee . . .

And who will provide you with so much more value that can propel you toward being part of the 5% of people who succeed financially.

Here’s more about what to look for so you work with a real mortgage consultant, not a typical run-of-the-mill loan officer.

This site implies a heavy emphasis doing your mortgage online, either initially or throughout the process.

Doing your mortgage online without the critical guidance of a real mortgage consultant is another recipe for financial failure.

I have also discussed this extensively, see more here . . .

“What you lose with an online mortgage”

“Some mortgage guy in a suit”

There you have four good reasons why the concept described in this article is not good for you . . .

In fact, the concept described in this article is a recipe for your financial failure . . .

The recipe for your financial success is simple . . .

Work with a real mortgage consultant, not a typical run-of-the-mill loan officer – here is how you can tell the difference . . .

Then make the wise choice for a real mortgage consultant.

What really affects mortgage interest rates?

It’s probably not what you think . . .

The Federal Reserve does not set mortgage rates, although some of their actions could influence rates . . .

Banks don’t set mortgage rates . . .

Mortgage rates are determined by a basic economic principle called supply and demand . . .

What is the demand vs. the supply of mortgage-backed securities in the marketplace?

See more here . . .

Mortgage-backed securities are what allows mortgage financing to be available to the bulk of the population rather than restricted to a privileged few people.

If it weren’t for mortgage-backed securities, for example, mortgages with less than 20% down payment may not be available.

Mortgage-backed securities allow lenders to sell the loan on the open market, making them free to loan that money again to the next borrower.

If they couldn’t sell the loan on the open market, they would have to keep the loan in house and would not be free to loan that money again.

This would have a serious effect of drying up much of the money available for lending.

So, what happens is that a whole group of mortgage loans are bundled together into one security, a mortgage-backed security, and is sold in the marketplace much like a stock would be.

Therefore, it is this up or down fluctuation in the security pricing that changes the interest rate.

When the Federal Reserve changes their rate, that change may have a ripple effect through the economy and thereby affect mortgage rates, but it can’t have a direct effect.

See more on that here.

In the last few years, the Federal Reserve has also been holding mortgage-backed securities in their portfolio.

The Fed is now beginning to sell off that inventory, see here. This could have the effect of increasing supply in the marketplace and thereby reducing the price of the securities.

This reduction in the securities price will cause the interest rate tied to the security to go up.

So, again, the Federal Reserve can influence the interest rate, but they do not have a direct effect on it.

A real mortgage consultant will track this for you, help you monitor the trend in rates, and guide you toward the right actions for your specific situation.

Remember that even though the interest rate is not the most important factor for your mortgage, your real mortgage consultant will track it for you and put it in the right perspective for you