debt to income ratio DTI?

Question

I am refinancing my home Can anyone tell me please if I pay the home owners insurance in full for one year,will reduce my debt ratio in order to qualify for the mortgage loan ? Thanks

Answer 1

Paying your home owners insurance in full for one year will not reduce your debt ratio. All lenders will include your monthly insurance & tax payment. I noticed in a previous question that you mentioned a debt to income ratio of 41%. I am a lender/broker. Most of the option arm programs have a maximum debt to income ratio of 45%.

I am not certain what program you are looking at, but if you are interested in an option arm, I would recommend a flex option arm. This will give you fixed rate for 5 years and because of how the minimum payment option is structured will give you less negative amortization. You take your fully indexed rate and subtract 3%. Take this rate as an interest only payment and this is your minimum payment option.

Option arms qualify you on the fully indexed interest only payment. These rates are usually a lot higher. If your debt to income ratio is close, you might want to look at an interest only arm program. This will qualify you at a much lower rate and payment.

I hope this information helps.

Answer 2

To lower your DTI ratio......you must pay down your consumer debt (auto loans/credit cards/dept card/student loans).....

Remember 100% of the foreclosures out there were approved for mortgages.....Don't rely on the bank to tell you if you can afford a mortgage.....you make that decision....