I often speak with potential refinancing homeowners that tell me they don’t think they’ll meet the debt-to-income (DTI) requirements for a new debt consolidation loan because they are holding too much debt. What many don’t realize is that all of the debts to be consolidation into the refinance are excluded from the DTI calculation, because they will not be a debt after the consolidation.
For instance, suppose the following:
DTI Before Consolidating Credit Cards
Gross Monthly Income $4,400
Proposed New Monthly Mortgage Payment $1,400
Monthly Property Taxes $250
Monthly Homeowners Insurance $80
Monthly Car Payment $300
Monthly Minimum Credit Card Payments $450
Total Household Expenses $2,480
Total Gross Monthly Income $4,400
$2480 divided by $4400= .56 DTI
In the example above, the proposed mortgage would be difficult for approval because it results in a proposed DTI of .56, which is over the limit required by most lenders.
DTI After Consolidating Credit Cards
Gross Monthly Income $4,400
Proposed New Monthly Mortgage Payment $1,400
Monthly Property Taxes $250
Monthly Homeowners Insurance $80
Monthly Car Payment $300
Total Household Expenses $2,030
Total Gross Monthly Income $4,400
$2030 divided by $4400= .46 DTI
After consolidating the credit cards, the result is a DTI of .46 and the loan would be in good shape for approval for income by most refinance lenders
Hopefully, this example will help those that would benefit with a debt consolidation refinance, especially with today’s mortgage rates, that may have just assumed they would not meet the income requirements.
If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
0 comments:
Post a Comment