Now that you understand what a debt to income ratio is and the importance of it on your mortgage loan application, it is critical that you are calculating it correctly. In order to figure out your debt to income ratio correctly you must understand what monthly debt obligations are included in your DTI.
[ezcol_1half]
What is Included:
- Mortgage Payments
- Real Estate Taxes(If Escrowed)
- Home Owner’s Insurance (If Escrowed)
- Car Loan Payments
- Student Loans
- Credit Card Payments
- Time Share Payments
- Personal Installment Loans
- Child Support
- Alimony
- Any Co-Signed Loans[/ezcol_1half]
[ezcol_1half_end]
What Isn’t Included:
- Home Utilities
- Car Insurance
- Cable Bill
- Cell Phone Bill
- Health Insurance
- Current Rent/ Mortgage Payment
- Charitable Contributions[/ezcol_1half_end]
These lists should help you to understand what monthly obligations your lender is analyzing when calculating your debt to income ratio. Before applying for a mortgage take the time to sit down and add up all of you monthly debt obligations that are included in your DTI. You may be surprised at how low or high your numbers may be. You’ll also feel more confident when you contact your mortgage provider to submit an application.