Information On Income Versus Debt Ratio For Boston MA Home Loan Pre-approvals

Personal finances play a significant role in loan pre-approvals. All mortgage companies examine your assets, income, credit and debts. These determine if you qualify for financing and the amount. The following is information on income versus debt ratio for Boston MA home loan pre-approvals.

Calculating Income

Mortgage companies will consider your gross monthly earnings. This counts only items that may be verified. Wages are the most typical type of income. Mortgage companies will ask for paperwork (such as tax forms) for the previous 2 years, giving them a picture of stability. They might ask for explanations on any strange conditions, such as fluctuations in earnings. Other sources of income can include child support, investments, and stocks. Any items that you would like counted must be verifiable. Past earnings and likelihood of continued earnings is naturally helpful. The amount of documentation needed may differ from one mortgage company to another and some exceptions might also be allowed. It is important to inform your loan officer of all potential income sources for a thorough evaluation.

Debt Analysis

Debt includes all monthly expenses such as credit cards and installment loans. The exact monthly payments on loans and other fixed-payment debt are used. For adjustable items like credit cards, minimum monthly payments are applied. These figures are normally noted in your credit report. Many lenders may agree to ignore debts with less than a year remaining in payments or that you can prove someone else is responsible for. Payment figures are added up to figure out overall monthly obligations.

Information On Income Versus Debt Ratio For Boston MA Home Loan Pre-approvals

Mortgage companies compare the monthly income to debt to come up with the income versus debt ratio, which must remain under set limits. Additionally, mortgage payments and your total debt should stay within a specific percentage for loan approval. The precise benchmark differs for each lender and from program to program.

An Example

For example, a mortgage companies might allow up to 28 percent for mortgage payments and up to 40 percent for total debt.. Using these sample figures, an individual earning 60,000 annually (5,000 monthly) would be allowed up to a 1,400 per month mortgage payment and allowed 2,000 a month for combined debts.

Note that this is strictly an example and considers only the income versus debt part of the financial analysis that may be performed. There are many other factors, such as FICO score and loan program requirements. It is important to work with an experienced mortgage company for full details on income versus debt ratio for Boston MA home loan pre-approvals specific to your particular finances.

About Scott Beard

Finding the right Realtor can be the difference between a happy, stress-free home buying or selling experience, and an unhappy, stressful experience. That’s why choosing the right Agent to begin with is key. I have helped hundreds upon hundreds of clients during my career and sold over $55 million in properties and look forward to putting my experience to work for you.
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