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Why Debt To Income Matters In Mortgages

Monday, July 11, 2011 - 12:30 PM
From Bankrate.com
Paying your bills on time, having stable income and boasting a good credit score won't get you a mortgage loan if your lender determines that you live too close to the edge.

In the mortgage lending world, your distance from the edge is measured by your debt-to-income ratio, which, simply put, is a comparison of your housing expenses and your monthly debt obligations versus how much you earn.

Knowing your DTI is just as important as knowing your credit score when you get ready to apply for a home loan, says Ed Conarchy, a mortgage planner and investment adviser at Cherry Creek Mortgage in Vernon Hills, Ill.

"People are so focused on their credit scores and on getting a low interest rate that they forget to look at the big picture of their financials....

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