The Debt To Income Ratio Reality Check
Monday, August 17th, 2009 Subscribe To Our Feed
One of the toughest scenarios is to hear the phrase I’m sorry but your debt to income ratio is too dangerous. When this is the case, you may possibly find yourself in difficult financial waters, specially if you are considering to acquire your own home.
Even if you have a great credit score and have always paid your debts on time, a bad debt to income ratio can really define your financial loans future.
Any significant loans you may have can reek havoc with your debt to income ratio. Considering how old you are, it may be needed to consider the step of someone going co-signatory on your loan for you to be sanctioned for a mortgage. Making positive steps in your debt to income ratio can have an almost miraculous impression on how you are treated in the world of finance.
The optimal place to start in taking control of the situation with your ratio is to nail your credit cards. The interest rates on credit cards is normally the greatest hurdle you will need to tackle. Even if you can only afford to contribute an extra $20 each month as small but frequent dents in your primary loan amount can make a large difference. One common strategy is to reassign your most significant balances and interest rates to 0% interest rate cards, so you have the potential to pay off more per month. Savings from no interest rates can mean your debts can diminish dramatically.
Take action and address your debt to income ratio. You are dealing with your future here.
Until my bank manager pointed it out to me, I had no idea that I had been continually cruising into debt for the last several years. I took out a home improvement loan, went a little crazy and bought a top of the line home theater system, took a few pricey vacations, and put my oldest child through college. I knew that I was making debt payments that were steeper than I wanted, but I didn’t see that I was in deeper than I could handle..
The truth was that it had grown so dramatically in the last few years that I no longer had the money to support my lifestyle. I needed to eliminate some of that debt!
I punched the numbers into a debt consolidation calculator and was both apprehensive and relieved that it was doable to dig my way out of debt if I made some positive steps now. All was not lost.
I got a debt consolidation mortgage loan, reduced the amount of money that I spent on entertainment, and changed my priorities. By the time I was done, I had a plan that would reconstitute my debt to income ratio within 12 months. I have not been in serious debt since.
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