Buyers in the housing market might think they are ready to buy a house; however, they may have forgotten one very important issue. The debt-to-income ratio is extremely important in calculating mortgage payments. Lately, what has been the biggest obstacle for the buyer getting approved for new home financing is having a large car/truck payment relative to their income. We all love our vehicles, but banks think of having a large dept relative to their income as being very fiscally irresponsible. Therefore, in order to purchase a house, one might have to buy out of their lease, put the lease into their spouse or friend’s name, or simply just sell their vehicle.
Consequently, for the first-time house buyers, they must consider the debt-to-income ratio before purchasing or leasing a new vehicle. Think ahead! Does that car payment make one’s debt-to-income ratio tip off balance and prevent them from buying a house in the future? Because if it does, one may want to rethink that new vehicle purchase or purchase one of a lesser value!
Romaine Bray Realtor