One of the many reasons to hire a real estate agent is so they can help you understand lender and real estate jargon. If you’ve never applied for a loan before, you have likely never heard the phrase, “Debt to Income Ratio”. These words may determine whether or not you will qualify for a loan, or at least the interest rate you will receive on the loan.
Debt to income ratio looks like this:
The amount of money you bring in every month
The amount of money you spend every month.
Why does this matter?
This number will help lenders determine two things:
- Your eligibility
- The likelihood you will be able to repay the loan
To get this ratio, let’s play with some numbers:
You make $3,000 a month (income)
You spend $1,000 a month on rent, other loans, etc. (debt)
1,000 / 3,000 = 33%
If you’re looking at your debt to income ratio, then chances are you’re wanting to buy a home. Call me, Jill Bell, at 479.799.3023. I’d love to put you in touch with a local lender to get the process started!