Posted on: 04th Oct, 2009 05:45 pm
I tried to prequal for a loan but was told that my credit was god 721 but my debt ratio was too high. any suggestions?
Whn you have high debt to incoem ratio, you need to work or paying off some loans and if you have lot of credit card debt you need to work on paying them off
Good news is that your score is good and shows that you have been responsible with credit and can handle any future commitments
But the Debt to Icome ratio can be reduced by either by increasing the Income or by reducing the debt. If you pay off your credit cards every month, I wouuld suggets you to do that before the closing date, that may indirectly help you reduce your debt to income ratio
Good news is that your score is good and shows that you have been responsible with credit and can handle any future commitments
But the Debt to Icome ratio can be reduced by either by increasing the Income or by reducing the debt. If you pay off your credit cards every month, I wouuld suggets you to do that before the closing date, that may indirectly help you reduce your debt to income ratio
a lender will always need to know that you can afford the repayments on your loan, whether or not you have a good credit history. If your income isn't high enough to service the proposed repayment amounts, they won't lend as they know from experience that the chance of you defaulting is too high.
you could look at reducing existing your debts, possibly look at debt consolidation if you have a lot, particularly high interest debts like Cred it cards. this can help you get the total debt level paid down a bit.
Aside from that you could also look at the possibility of renting out one of the rooms in your house. If you can use the house extra space to generate some additional income, your lender may look more favoutrably on your application.
you could look at reducing existing your debts, possibly look at debt consolidation if you have a lot, particularly high interest debts like Cred it cards. this can help you get the total debt level paid down a bit.
Aside from that you could also look at the possibility of renting out one of the rooms in your house. If you can use the house extra space to generate some additional income, your lender may look more favoutrably on your application.
if paying down your existing accounts isn't feasible at this time, and if increasing your income isn't feasible at this time, then there's not a whole lot left.
you can try to convince a family member to be a co-signer for you (if you seek fha financing), or you can shoot for a property that is less expensive than what you're currently contemplating.
i cannot agree with wretched's take on a roommate. you're not going to be able to use rental income taken from a room being rented unless you have established yourself as a landlord in the past. a single family home cannot have rental income as a general rule, anyway.
you can consider the purchase of a multi-family home as one way in which to increase your buying power, though.
if none of the above are suitable to you, then your best option is to decrease your monthly obligations as quickly as you're able.
you can try to convince a family member to be a co-signer for you (if you seek fha financing), or you can shoot for a property that is less expensive than what you're currently contemplating.
i cannot agree with wretched's take on a roommate. you're not going to be able to use rental income taken from a room being rented unless you have established yourself as a landlord in the past. a single family home cannot have rental income as a general rule, anyway.
you can consider the purchase of a multi-family home as one way in which to increase your buying power, though.
if none of the above are suitable to you, then your best option is to decrease your monthly obligations as quickly as you're able.
since your debt to income ration is high, it would be difficult for you to get mortgage.
you need to manage your debt first. or reduce house loan requirement
you need to manage your debt first. or reduce house loan requirement