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CHARLES RUTENBERG REALTY INC
CBM Sells Team, CHARLES RUTENBERG REALTY INC
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What Is A Debt-To-Income Ratio?

by CBM Sells Team 01/06/2019

You know when you buy a home that your credit score matters, but do you see all of the numbers that matter to your financial picture when you’re buying a home? Your debt-to-income ratio is one of the most critical figures that will influence if you can get a mortgage and what type of rate you can get. 


What Is A Debt-To-Income Ratio?


This number is exactly what it states: the ratio of debt divided by your gross monthly income. Your credit report doesn't include any of this income information. This number is actually the best way to see if you’re living within your means or not. This way, your lender will know your monthly debt payments along with your monthly income.  


If your ratio of debt is high, you may not get a loan or get less desirable interest rates than if you had lower amounts of debt. Even if you have a high credit score, your debt-to-income ratio could affect these things. In reality, a higher debt ratio will make it harder for you to pay back your debt, so it’s important to you. 


How It’s Calculated


You can use an online tool to help you calculate your debt-to-income ratio. You can also use a simple formula if you’re up for doing some math yourself:


Divide your monthly debt payments by your monthly gross income then multiply that number by 100. For example:


Student loans: $400

Car loan: $300

Rent: $700

Income: $4,000 


1400/4000= 0.35 x 100= 35%


Household Ratio


You should also be aware of something called your household ratio. The household is the amount of home-related expenses which includes property taxes, prospective mortgage, home insurance, and more. These costs are divided by your monthly income to get this ratio as well. Obviously, your household debt adds to your financial commitments and is also put into consideration by your lender.    



What’s A Good Debt-To-Income Ratio?


It’s ideal that you keep your ratio less than 36%. Your household ratio should be even lower than this. It’s great to be debt free, but in the real world, that’s not always possible. Your best bet is to be responsible with your finances and work on paying your debt down as much as you can. Then, little by little all of the critical numbers that are required to get a mortgage will fall into place.  

    


About the Author

Author
CBM Sells Team
CBM is the elite team for Charles Rutenberg Realty. The team is comprised of Candra Granville Mack, Blanche Davenport, and Melodie "Mel" Cooper. Our team has worked with many Tampa Bay buyers and sellers, including high profile celebrities. From the onset we have consistently been the top sales and listing agents. Many multiple millions in team sales during our years in the business brings you the experience and leadership you can depend on to get your real estate dreams fulfilled. We each sincerely mean what our motto says, "Caring Business Magic". This is our goal and a truth we each live by for all of our clients. Let us prove to you that we do mean what we say. Call today to become part of our CBM family. Meet the Team: Candra Granville Mack Even though I have seen so many changes in Hillsborough County as a Brandon native, I am still amazed by the growth past and present. There are so many changes, particularly in the real estate market. In 1998, when I got my real estate license, very few folks had email addresses or for that matter, even computers. There are many stories to tell you, but the main one is all about you. Today with all of the technology and ads that are everywhere the market is so fast paced and confusing it is often difficult to make a wise decision. With me at your side the process will be smoother and easier in all aspects. My extensive knowledge of real estate with finely honed communication and negotiating skills gives you the edge needed to get the best property at the best price possible and or sell your home with your highest net profit. It has been my pleasure to help literally hundreds of fabulous buyers and sellers. Helping you with your real state dreams and needs is my goal and what I do best. Blanche Davenport In a world where customer service is becoming technology driven, void of the human element, I not only offer today’s technology, but real customer service, something that will never be going out of style or be replaced by technology. By putting heart into the process of real estate, a career where I can effectively help hundreds of people, including entire generations of families, you will experience the value of nearly 45 years of customer service with a focus on you. I am about you, your needs, dreams and aspirations. As an agent since 1995, I am a well-trained communicator, making my negotiating skills finely tuned to get you the best outcome whether you are a buyer or seller. There are only a few letters behind my name, which are the ones that really count. Those letters spell Realtor®, a word I am proud to have earned and strive to live up to every day. Melodie, "Mel", Cooper Throughout life helping others has been and continues to be my focus. Knowing that real estate buying or selling can be a complex undertaking I want to make it as easy as possible for my clients. Having me as your Realtor will help save you time, money and you will even enjoy the process! Assessing and applying your needs to help you reach your dream home is a specialty of mine. As your Realtor®, I will make sure that you get the most out of your next real estate transaction! With my 40 years in Tampa and an agent for 15 years my wide range of real estate knowledge in short sales, foreclosures, new homes, resale homes, investment properties we will be able to seek out your next home from many sources. With me on your team, we will work closely together to create the fulfillment of your dream and your future plans. For a buyer, I am ready, willing and able to be there with you until you have that special home. For sellers, I market their properties to achieve the most money as easily and as quickly as possible. CANDRA GRANVILLE MACK Serving zip codes 33578, 33579, 33592, 33594, 33579, 33602, 33603, 33606, 33607, 33609, 33624, 33625, 33626, 33629, 33543, 33544, 33545, 33547, 33548, 33549, 33556, 33558. 33559, 33572, 33542, 33510, 33511, 33527, 33663, 33566, 33567, 33565. 33569, 33584, 33540, 33541, 33542, 33569, 33568, 33570 BLANCHE DAVENPORT Serving zip codes 33609, 33611, 33612, 33613, 33614, 33615, 33617, 33618, 33624, 33625, 33626, 33629, 33637, 33647, 33543, 33544, 33545, 34638, 34639, 34655 MEL COOPER Serving zip codes 33578, 33594, 33579, 33592, 33602, 33603, 33606, 33607, 33609, 33611, 33612, 33613, 33614, 33617, 33618, 33624, 33625, 33626, 33629, 33637, 33647, 33543, 33544, 33545, 34638, 34639, 34655, 33547, 33548, 33549, 33556, 33558, 33559, 33511, 33542, 33510, 33616