Buying a house and consolidating debt
Spreading out debt over a term of 20 to 30 years can reduce your payments significantly.
Additionally, mortgage rates tend to be lower than the interest rates on unsecured debts such as credit cards.
Simply put, your DTI ratio is a measurement that compares your debt to your income and determines how much you can really afford in mortgage payments.
Most lenders will not approve you for a mortgage if your DTI ratio exceeds 43 percent. Learn more about how to calculator your debt-to-income ratio here.
Although including debt in your new home loan can have benefits, the debt itself can be an obstacle to approval.
If your repayment history is uneven, the lender will hesitate to approve your application.
And it may actually hurt your chances for getting a bank loan, as some lenders are reluctant to provide loans to people with new jobs.
Whenever a study is released about millennials and money, the findings are usually depressing.If you add ,000 in debt into that loan, you must put ,000 down.Coming up with that much more money may be difficult, even delaying or killing the purchase entirely.Include the purchase price minus the down payment and the total amount of other debt you wish to include.Select a term and write down the information on the property you wish to purchase.While rates will vary based on credit card and mortgage companies, a credit card can carry rates as high as 20 percent, while a mortgage can be as low as 3 percent.In some cases, your monthly payments might be so high, the bank will require you to pay off your debt in order to qualify for a mortgage.“Consolidating credit cards or consolidating student loans will reduce the minimum monthly payment, which will lower the debt-to-income ratio and improve borrowing power.”In other words, rather than paying off six credit cards each month, consolidate those balances into one, lower monthly payment. When I started thinking about buying a house, I assumed I would need a 20 percent down payment.A growing market for personal loans makes this easier. Given that I had very little savings, I assumed I’d be dealing with landlords for the rest of my life.Carl Carabelli has been writing in various capacities for more than 15 years.He has utilized his creative writing skills to enhance his other ventures such as financial analysis, copywriting and contributing various articles and opinion pieces.