Calculating your Debt Ratio
When you are getting ready to buy a Michigan home the lender will ask you what you earn a year gross, ask to pull a credit report. The reason they do that is to look at your credit scores, your credit history, and the amount of debt you have.
The lender will calculate how much you earn per month (gross, before taxes). They will take any payment that is on your credit report and add it to your projected house payment along with the projected taxes and insurance. So they are going to add up all your credit card payments, car payments, student loan payments, future monthly house payment, monthly real estate tax payment, monthly house insurance payment and divide it by how much you make.
Where you want to be is less than 41% of your gross monthly income. So if you do not meet that you want to reduce your debt, or increase your income.
Call me at (248)310-6239 cell to figure your debt ratio and how soon you can start to buy a home. Or email me
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