What is DTI and what role does it play in homebuying?
Simply put, DTI stands for debt-to-income ratio. Or, the total amount of debt you have compared to your gross monthly income. Although one debt might have a higher interest rate, they are all lumped together as one sum.
When it comes to purchasing a home, DTI plays a vital role in your loan approval. It can affect the loan amount you’re approved for and the interest rate associated with your loan.
Your DTI should be low to prove you are reliable and can take on the additional monthly debt of a mortgage payment.
If you have a large sum of debt, don’t let that scare you. Devise a plan to tackle the debt. It might be a slow process, but it’s not impossible.
Once your DTI is lowered and you’re ready to start the homebuying process, learn all you more about the process need to here.