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.
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.
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.