Media reports will vary throughout time. Interest rates will change up and down. An increase in rates may mistakenly convince you that refinancing is not worth looking into. The reality is that rates are still favorable and low. Mortgage loans, generally speaking, are the cheapest and safest type of money to borrow. Consumer debt on the other hand is quite expensive. Debt consolidation, home improvements, removing PMI, and other financial needs should be evaluated to determine the net tangible benefit of refinancing. And while it may sound a little whacky, there may be benefits to refinancing coupled with an increase in your mortgage loan interest rate. Sounds nutty, maybe not. Ask us how.
Most times, there are too many variables to consider having a hard and fast rule about debt to income ratio. Your lifestyle needs to play a factor when making a decision. Your total household income impacts various loan programs. And while it’s important to evaluate current monthly expenses, true income, versus qualifying income, along with your financial reserves should be considered. Overall, while debt to income ratios are a critical component when qualifying for a mortgage loan, isolating this variable and capping the ratio at 30 percent is many times not the correct approach. Learn about mortgage money. Ask us how.
If that were the case, lenders would only offer 30-year loans. It is true that 30-year mortgages guarantee the lowest monthly payments. However, 30-year mortgages do not offer the best lending terms. You will spend more money over time because it equates to a greater amount of interest and a shorter amount of principal paid at each payment. Shorter term loans, at 15 years for example, have higher payments, forcing more money to principal sooner. Considering your lending options and getting educated will help you make smarter lending decisions. Ask us how.