Mortgage-Refinance Loan Measurment 101 — Evaluate Your Own Ability to Pay
your debt can be half of your gross monthly income. Lenders, you see, want to make loans. That’s why they are so rich, because they are doing trillions of dollars in loans each year, and getting back even more in interest payments.
In order to assure yourself of getting a loan that you can afford, you should qualify yourself. It’s important to remember that when calculating debt to income ratios, lenders don’t take many important factors into account. For example, they allow you to use gross income — instead of net income. We pay our bills with our net, not our gross. When deciding what you can qualify for, consider your net income.
In other words, add up all your debts and look at the money you have after taxes, retirement, savings, other investments, etc. Also, account for debts lenders do not, such as insurance, groceries, utilities, the probability that taxes on
