When you’re buying a farm or house for sale in Northern Florida, your debt-to-income ratio matters to lenders – it’s part of what they use to determine whether you qualify for a mortgage loan.
But why does it matter so much?
Why Does DTI Matter?
Lenders use your DTI to figure out whether you’ll be able to pay back a loan – and since home loans are usually pretty substantial (they can be hundreds of thousands of dollars), lenders want to make sure you’re capable of repaying them. Otherwise, they’ll have to take a loss and foreclose on your home… and what’s a bank going to do with a house?
Evidence suggests that borrowers who have a higher debt-to-income ratio are less likely to be able to cover payments all the time. In fact, they’re much more likely to run into trouble and eventually foreclose, according to the Consumer Financial Protection Bureau.
How Much Does DTI Matter?
Generally speaking, your DTI should be under 36 percent if you want a lender to trust you with its money. That means less than 36 percent of the money you make each month should go to debts like credit card payments, car payments, house payments and other obligations.
Higher DTIs are workable in many cases, but you may end up paying more in interest or you could have to come up with a larger down payment to make the loan smaller.
Are You Buying a Home for Sale in Lake City?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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