Debt to Income Ratio…what is this?

by | Jun 9, 2017 | Real Estate | 0 comments

Upcoming Free (& non-promotional) Home Buyer Classes:Saturday, June 10th, from 9am-12pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Saturday, June 24th, from 11am-2pm (ish)
Vancouver YMCA, conference room
11324 NE 51st Circle, Vancouver WA (corner of SR500 & Gher Road/112th Ave)

If these class dates and/or times don’t work for you, please let us know.  We understand that you have lives, and families, and work.  We will work something out that works better with your schedule.  Just let us know….                                                                                  

….we also have home seller classes available too…link on left on website
                  
Remember…with reservation…we will throw in lunch, or dinner!  😀
                                ~~~~~~~~~
Happy June!

It’s that time again (and again!)…  CLIENT APPRECIATION EVENT time… Yay!!  😀
Saturday, June 17 from 3pm-6pm.
Chris Berg & I would like to invite our clients to come watch a movie with us.  Didn’t we just have one?  Well, yes…yes, we did and we had so much fun that we want to do it again!
Which one now? Well, it involves some Disney, a red car, a tow truck, some really good music, and really good friends along Route 66 . 
 Come join us for Cars 3!!
This is just our small way of saying, “THANK YOU” for your continued support, friendship, and oh yes, referrals. We appreciate YOU so much. Come watch a movie with us!  There’s always room for friends and family too.  🙂
We do need rsvp’s, and those can be made via the Eventbrite link seen RIGHT HERE: 
https://www.eventbrite.com/e/cars-3-client-appreciation-event-tickets-35089186702

We are always excited for the client appreciation events, and it’s almost as exciting for us as getting someone’s offer accepted on their dream home… or getting an offer signed around on the home they’re selling.  I know people think that Real Estate is about houses, and while, yes…that is partly correct, it isn’t completely correct.  😀  Real Estate is more about the relationships we form with our clients, and assisting them with their goals. 

So, my morning started out with the sound every parent dreads hearing at 4am…
Mom…i don’t feel….. *retching followed by the sound of liquid stench next to my bed* good…
*followed by more liquid stench*
This is the sounds and smells that makes one sit straight up in bed from a sound sleep screaming…

“Get to the toilet! ”
This leads to darling child going to bathroom moaning, “I think I’m going to * liquid stench* puke… (no kidding) … makes it to the toilet (hallelujah) but then she realizes the light is off so comes back to the light switch *more liquid stench* and then goes back to the toilet (I guess you can’t puke in the dark? )
Said darling, puking child passed by three toilets…. yes…. THREE to come puke next to my side of the bed because that’s obviously the best place to puke as I’ve found over my years of parenting.
I’m not much of a track enthusiast but attempting to hurdle the piles of liquid pb&j stench has made me much more nimble as I’m yelling at the dogs to stop trying to “help” us clean up the liquid landmines.
My beloved and I have the tasks of hunting down cleaners, puke buckets, and a mop (where the heck is the brand new mop?!) as our sweet and smelly child hovers over the toilet asking me if she can go back to bed because she’s tired (me too kiddo) and if this means she’s going to miss “field day” at school as this is now the most important item in our/ her puke filled world.

The cats have wisely fled our bedroom for less stinky parts of the home, the dogs are evidently under the impression that this is the best thing EVER, and we’re really not dressed appropriately to be trying to clean up this muck (seriously how does a small child have that much puke in her body? )
Over an hour later, I was finally lying back in my bed in my room that could best be described as the Bog of Eternal Stench even though I used a can of Febreeze, 3 rolls of paper towels, and 2 different kinds of cleaners (that I had to go dig in boxes in the garage for because we hadn’t unpacked them all yet), ….and we still have no idea where the new mop went.

My beloved spent the rest of the morning cleaning one of the dog kennels because our wonderful and vomitous child is so talented that she managed to puke inside it and on the dog that likes to sleep in there (but she couldn’t make it to a toilet?). He is now up for the day (please world… be gentle to him today as he is a man on the edge…. of sleep and vomit).
My beautiful and puking child went back to bed whining about the fact that she WILL miss “field day” at school with a puke bucket and a reminder that there is a toilet literally right outside her bedroom door.
This is Parenting…
 

Parenting and real estate… it’s actually a lot a like.  🙂

 This week we are going to talk really quick about Debt to Income Ratios as this is a very important part of the pre-approval process…. 
 
Debt to Income Ratios…
   This is one of the key ingredients of a pre-approval, and it is just as it sounds.  It is the ratio between how much you carry on personal debt and how much you earn.  Why do lenders care?  Because it gives them a good indication of how much additional debt you can handle. 
 
What Debt does a Lender Consider?
   Your lender will add up your ‘fixed’ monthly expenses such as your car payments, minimum credit card payments, and other regular payments like, monthly child support, student loans.  Your lender will not consider such bills as car insurance, food, utilities, phones, gas, and those other things that we regularly spend money on. 
 
Then What?  
   Your lender will look at the remaining income after those ‘fixed’ debts are subtracted from your gross income, and consider that you can use up to a certain percentage of that remaining income for a mortgage payment.  Now please don’t forget that your mortgage payment is more than just principal and interest…you have to add in taxes, insurance, and mortgage insurance too.  Your lender adds up those five components of a mortgage and that full payment can’t be more than a certain percentage of your income after debts.  It does change based on the loan you are getting approved for.  Some loans will allow you to go up to 40%-45% of your income after debt for a mortgage payment, where others won’t let you go above 35%.  Most FHA loans are about 45%  debt to income ratio, and that is pretty generous.  This leaves 55% of your income for those other things like, taxes, food, utilities, car insurance, movies, clothes, etc.  Again, as always, talk with your lender!  A lender is always your best source of up to date information regarding loans…and can help answer your questions!  It really is kind of a backward way of figuring out how much you are approved for since it starts with your income, minus your debts, and a percentage of the remaining amount going to a potential mortgage payment consisting of five parts.  Then your lender will take that potential mortgage payment and apply it to how much that payment is for a loan amount.  The truth of the pre-approval process is that you are NOT pre-approved for a loan amount….you ARE ONLY pre-approved for a monthly payment amount.  So…if interest rates change then so does your loan approval amount, and as interest rates go up, then the dollar amount of your pre-approval goes down.  If the taxes on the home are different than what your lender estimated when doing your pre-approval then, again, your loan amount can change.  It is important for your lender and your Buyers Agent to be communicating.  Remember that we both work FOR YOU, the buyer, and that our job is to HELP, ADVISE, and ASSIST you, the buyer, with your home buying adventure. 
 
How Much Can You Afford?
   Your lenders job is to pre-approve you for as much as they can…it is YOUR job to know how much you can comfortably afford.  Have a budget in place, and if you have an idea of how much you are going to be looking at for a mortgage payment then start that payment now.  If you are currently paying $1200 a month for rent, but your mortgage payment is going to be $1500-$1600 a month, then take that extra $300-$400 a month and put it away into a savings account.  This will help you in a couple of different ways…by letting you know if you can comfortably afford that payment, and by giving you a bit extra put away for those things that can come up after you buy your home….like paint for the rooms, and maybe a fridge, washer, and dryer, since most likely those items will not come with your home.

Chris Berg with Pinnacle Mortgage (503-320-0925 & cberg@pcmloan.com) will talk more about this in the classes.  🙂  You can also contact him with any lending questions.  We are always happy to help!

Next week let’s talk about what you NEED to buy a home…  and when it is due by.  🙂

Information is power,  and as always…May the odds be ever in your favor out there….  If you are looking for a real estate agent, I would love to be able to help you.  
If you have any questions, or comments please get a hold of me anytime.  You can call, text, email, or even facebook me.  Please remember that while I mean these emails/blogs to be helpful, and educational, I am still hoping that you will call, or email me as I would be honored to help you with your home buying, or home selling adventure!  🙂

 As always….this is just a quick overview…. again…and I can’t say this enough…please remember that your agent is NOT a salesperson, and should not be acting like one.  Real Estate is not really about houses, it is about relationships.  Your agent, and your lender work for YOU.  You drive the bus…we are merely GPS to help you get to your goals.  Like the classes, this weekly blog email is to help you with your home adventure.  The goal is to be informative and non-promotional.  🙂  We are, however, hoping you will call and want us to help with your adventure.  
 
Thank you again for your business and your referrals!!  …and thank you for referring these classes to your friends, family, and co-workers. 
 
 ….disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings…

 Upcoming Topics:
What do I need to buy a home,
Hiring a Realtor…questions to ask,

What if I don’t have a Down Payment? …..  &….
What does an Agent do for me?

Last Week:  ‘Rules’ to seeing homes… helpful hints for home buyers (& sellers)

Have a great day, and I will talk to you soon,
;-D

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA
360-903-3504

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