subject: Debt To Income Ratio: A Factor To Ascertain Amount To Be Granted As Real [print this page] Real estate industry in U.S has undergone many changes concerning customer service polices. Its nice to see and hear that real estate loans have attracted more buyers from all earning groups. If we talk of aspirations of an upcoming American family, owning a house is seen at the top list. Even those citizens who have bad credit approve the importance of real estate buying before market attains a boom concerning prices. If you go for a buying a real estate loan to any lender, your paying capacity would be judged. You can demand any more or less amount for buying a home. However money lenders have the ultimate power to determine the maximum amount of mortgage, for which you are eligible.
To determine highest amount of real estate loan, mortgage lenders use the system of calculation through debt to income ratio. Real estate calculator is used by customers to know the time taken to payback a particular amount. Debt to income ratio is used by banks and lenders to grant finance to a customer according to his/her paying capacity. This ratio is the calculated percent of your gross monthly earnings, used to pay monthly mortgage debts. This ratio is made of two parts the front ratio and the back ratio. The first one is the percent of your gross monthly income before tax deductions to pay home loan EMI including principal money, home insurance, interest and insurance for mortgage loan. Back ratio also refers to the same thing. However it also includes payments of monthly consumer bills concerning maintenance of car, credit card payments and other installment expenses. While calculating back ratio factor of life insurance and auto insurance are not included in them.
Debt to income ratio is generally taken as 33/38. The monthly costs of a mortgage loan generally consume 33% monthly income of a borrower. If we add monthly consumer bills like costs of car and credit card services etc, this ratio wont exceed thirty eight percent of borrowers monthly earnings. As concerning down payments of these loans, guidelines are a bit rigid on making less down payment money. Guidelines become flexible and easy on paying a large margin of down payment. Provisions have also been created for no down payment real estate loans. They are applicable in cases of those mortgage buyers who have the capacity to pay small monthly installments without any token money. For solving more queries you may visit us at http://allsolutionsnetwork.com/cgi-bin/d2.cgi/PN56194/real_estate_loans.htm
by: realestate associates
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