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Calculating Your Debt to Income Ratio: What’s the Sweet Spot for Lenders?

Calculating Your Debt to Income Ratio: What's the Sweet Spot


Calculating Your Debt to Income Ratio: What’s the Sweet Spot for Lenders?

The Housing Affordability Index is something that experts use to determine if a family earns enough money to buy a house. You must make enough money to qualify for a loan, so this index is vital.

When you apply for a loan, you probably will not hear anything about this index, though. Instead, your lender might talk about numbers, amounts, and ratios, and they will likely bring up the debt to income ratio.

If you aren’t sure what the debt to income ratio is, you should learn before applying for a loan. This ratio helps lenders determine your risk level and loan amount, and all lenders use it.

Here is a guide to help you learn the definition of this ratio, what a good one is, and other information relating to debt to income ratios in lending.

The Definition of Debt to Income Ratio

Lenders use various tools and calculations when evaluating loan applications, and one of these is debt to income ratios. A debt to income ratio compares a person’s debt payments to their income to see where they stand.

The purpose of this calculation is to determine risk. People with high debt to income ratios might have trouble repaying loans, as they already have high debt loads. As a result, a bank will consider a person like this a high risk.

People with lower ratios might face fewer challenges in paying their loans. Banks view these individuals as low-risk borrowers.

Your debt to income ratio reveals a lot about your financial picture. Not only is this important to understand, but it is also essential to calculate your ratio before applying for a mortgage.

How to Calculate Your Debt to Income Ratio

Are you wondering how to calculate debt to income ratio? If so, here is an explanation to help you learn how to determine yours. To find your debt to income ratio, you must know two main things:

  1. Your gross monthly income
  2. Your total monthly debt payments

First, your gross monthly income is a total of all the income you earn per month. It is the amount you earn before taxes, and it should include income from all sources.

Next, your total monthly debt payments include routine debts you must pay each month. Your total debt payments might include your car payments, student loans, credit cards, and other loan payments.

You do not include your regular monthly expenses, such as utility payments and insurance. This ratio only factors in other types of expenses that are “extras.” In other words, you should add in any types of loans that you will eventually pay off.

Once you have these two amounts, you divide your gross monthly income by your total monthly expenses. The answer you get is a percentage, and this percentage is what matters to lenders.

If you have trouble calculating these amounts yourself, you could use a ratio simplifier, which is a tool that calculates the ratio for you. To use it, you input the amounts it asks for, and the tool provides your debt to income ratio.

What Lenders Look for With These Ratios

While lenders view factors other than your debt to income ratio, this ratio is one of the most important factors in a lender’s decision. What is a good debt to income ratio, you might wonder?

Most lenders view a ratio of 43% or less; however,  most lenders prefer a ratio of 36% or less. If your ratio is higher than 43%, you will probably face challenges getting approved for a loan.

This ratio reveals a lot about your risk level. When a person has few debts to pay each month, they may have an easier time paying their bills. People strapped with major debt loads, on the other hand, often face more challenges paying their bills.

Banks know this and fully understand how this works, which is why they place a lot of weight on a person’s debt to income ratio. If you’re worried that yours is too high, you might want to work on improving it before applying for a loan. 

Ways to Improve Yours Before Applying

So, what is the best way to improve your debt to income ratio? Well, there are several options you can pursue.

The main goal is to increase your income and decrease your debt payments. If you can achieve these goals, you can transform your ratio to meet the sweet spot that lenders look for when evaluating loan applications.

The first step is to find ways to increase your income. Is there a way you can work overtime at your current job to bring home more money? Could you take on a second job or start a home business to increase your income quickly.

Finding ways to increase your income will instantly help you improve your debt to income ratio. The next step, though, is finding ways to reduce your expenses.

The most logical way to decrease expenses is by paying off your loans. For example, if you have a car loan with a $500 monthly payment, is there any way you could pay off the balance of the loan? If so, you’ll see a positive change in your ratio.

Keep in mind; you shouldn’t use all your cash to pay off your loans, though. You must keep some for your down payment and moving expenses. If necessary, you might want to spend a few months working on paying off your debt before applying.

If you can pay off enough debt in a few months without using all your savings, you’ll see an improved financial position.

Make Sure You Prepare Financially Before Applying

As you can see, your debt to income ratio matters a lot when applying for a mortgage. Additionally, your credit score also matters, as does your financial picture.

If you feel like you’ve learned a lot about mortgage lending in this article, you might be ready to learn more. You can learn more by browsing through our website for lots of other articles.

Health

What’s the Difference Between UPF vs SPF Protection?

What's the Difference Between UPF vs SPF Protection?


What’s the Difference Between UPF vs SPF Protection?

You need to protect your skin and the skin of your family members. Either in the sweltering summer heat or the cool, snowy rays of winter, the sun is a silent danger. But with so many methods of sun protection and ratings on the market, how can you decide which is the best for you?

When it comes down to UPF vs SPF, what is the difference and which is best? We help you decide our quick and handy guide.  

What is UPF?

UPF stands for Ultra Violet Protection Factor and is a relatively new sun protection measurement designed for sun protective fabrics. It is a grading system that states how much of the sun’s UV radiation can penetrate fabrics and reach the skin. The UPF standard is still a voluntary measure and may not be found on some products. 

UPF is measured on a scale of 15 to 50. The higher the scale number, the less of the sun’s rays can penetrate through the fabric. UPF also takes into account the amount of UVA and UVB rays that can reach the skin, whereas SPF does not. 

Do you need more information on quality UPF products? Are you still trying to figure out UPF vs SPF? This UPF guide is handy, informative, and can help protect you and your family starting today.

What is SPF?

SPF is a measurement that stands for Sun Protection Factor. It is based on the amount of time the sun takes to burn your skin. The number given on a bottle is a determining factor in how much time you can stay out after your average burn time.

The higher the value, the more protection it offers. For example, the average person takes 10 to 20 minutes to burn in the sun. A factor 30 SPF sunscreen would allow you to stay out 30 times longer than your normal burn time.

It is recommended that when purchasing a sunscreen SPF 30 is the standard protection factor. A factor of 50 only actually blocks out 1% more of the sun’s rays than a factor 30 and is commonly believed to be falsely advertised. 

UPF vs SPF and Which Is Best?

Clothing will always be the best form of protection against the sun. This is for a number of reasons. The first is that by blocking the sun with clothing, particularly UPF fabrics, the harmful rays are further away from the skin and less likely to reach your body. 

Another reason is that in daily activity, particularly when traveling or in outdoor pursuits, it can be too easy to forget the reapplication of sunscreen. Sweat from the body, water, and wear on the skin can all remove the protection afforded by lotions.

SPF also fails to measure UVA and UVB rays. UVA is responsible for the aging of the skin while sunburn comes from UVB rays. Both of these are also responsible for skin cancer, so it pays to have a measurement that protects you against these.

How Do I Get More Protection?

So, when looking at UPF vs SPF, how can you ensure you’re protected? One of the best ways to protect your skin is to use a combination of both. A high SPF factor sunscreen such as factor 30 should be combined with quality UPF fabrics and clothing. 

Protect your skin today by checking out some of the handy online UPF fabric guides today! 

Health

New Smile, Who This? What’s Possible With Cosmetic Dentistry Near Me

New Smile, Who This? What's Possible With Cosmetic Dentistry Near


New Smile, Who This? What’s Possible With Cosmetic Dentistry Near Me

Worried about the aesthetics of your smile? You’re not the only one. In fact, the cosmetic dentistry industry has grown by 2.4% between 2015 and 2020.

Don’t hide your smile or avoid the cameras. Instead, search “cosmetic dentistry near me” and discover your options! Cosmetic dentistry can improve your smile and your self-confidence.

Sound like a plan? Keep reading to discover the five ways cosmetic smile surgery can change your life!

1. Teeth Whitening

Cosmetic tooth whitening is a $3.2 billion global industry and it’s still growing. People feel self-conscious when they smile with discolored, rotten teeth. Instead, teeth whitening can give you a stunning smile. 

Your teeth can become discolored from:

  • Coffee and tea
  • Smoking
  • Drinking certain medications
  • Eating foods that contain dyes

After your cosmetic dentist whitens your teeth, it’s important to change your lifestyle habits. Otherwise, you’ll risk staining your teeth again by exposing them to the substances that stained them in the first place!

2. Bonding

Do your teeth have a lot of space between them? Search “cosmetic dentistry near me” and find a dentist who offers bonding services.

Bonding can help if you have excessive space between your teeth. It’s also an ideal procedure for cracked, stained, broken, or chipped teeth.

Your cosmetic dentist will use bonding materials to fill your teeth or protect a tooth’s exposed tooth. 

Bonding can last for several years. However, it’s more likely to become chipped, worn, or stained than other cosmetic dentistry restorations. 

3. Veneers

Veneers are usually made of plastic or porcelain. They’re ideal for teeth that:

  • Have excessive space between them
  • Are poorly shaped
  • Are somewhat crooked
  • Are stained
  • Have become chipped or worn

Your cosmetic dentist will first take an impression of your tooth. Then, they’ll buff the tooth and cement the veneer in place. 

Veneer listings longer than bonding. It can also improve the appearance of your smile more successfully. 

4. Crowns

Also known as caps, crowns can completely cover your tooth to improve its shape or appearance. Crowns are best for:

  • Covering a discolored or awkwardly shaped tooth
  • Protecting weak teeth
  • Restoring broken, worn, or chipped teeth
  • Holding dental bridges in place
  • Covering dental implants
  • Covering a tooth with a large filling

You might also benefit from a crown if you need to cover a tooth that required a root canal procedure.

Crowns are usually made from:

  • Metal
  • Porcelain fused with metal
  • Resin
  • Ceramic materials

However, crowns are costly. They’re usually suggested when other procedures won’t work.

5. Enamel Shaping and Contouring

Your cosmetic dentist can also improve the appearance of your teeth with enamel shaping or contouring. With this smile surgery, your dentist will remove or contour your enamel to improve:

  • Minor bite issues
  • Chipped teeth
  • Crooked or overlapping teeth

However, you’ll need adequate bone between your teeth as support for this procedure. 

Beautify Your Smile: Discover Your Options With Cosmetic Dentistry Near Me

Say goodbye to rotten teeth and discover the beautiful smile underneath. By searching “cosmetic dentistry near me,” you can find a cosmetic dentist ready to help! Improve your smile with one of these cosmetic dentistry procedures today. 

Looking for other ways to improve your image? Explore our latest Beauty posts today!

Business

What’s In It For Me? The Payoff of Real Estate Online Advertising

What's In It For Me? The Payoff of Real Estate


What’s In It For Me? The Payoff of Real Estate Online Advertising

Many people probably remember seeing Realtors(R) faces on bus benches.

It was just the way they used to advertise and bring in new clients. That image signified a great deal of pressure for the Realtor(R). Their smiling face had to be convincing enough to tell the client, they were trustworthy.

The internet, however, has changed real estate online advertising. Realtors(R) can now rely on the internet for their marketing strategies to bring in new business.

When you advertise online you’re trying to sell a lifestyle. Your goal is to make potential clients imagine themselves in their dream home.

If you want to make their dreams come through, we’ve put together a guide to help you do it.

Digital Means Trackable

The digital era has made it possible for real estate online advertising to reach more people than old-school advertising. With the use of Facebook accounts, companies are able to track the number of shares and followers. As well as Twitter and Instagram.

Google Analytics keeps track of daily page visits, time spent on the site, and places where people click.

With previous marketing campaigns such as bus benches and newspaper adds it was more difficult to track the audience reached. The problem with newspapers and magazine adds, is only readers from a certain age and demographic.

Pay-Per-Click Real Estate Online Advertising

Pay-per-click is a type of online advertising and they also appear near the google searches. This advertising model ensures the client only pays when the advertisement results in a lead.

If the real estate company doesn’t get a click on their ad, then they don’t have to pay for it. It’s a way to create cheaper and more effective promoting.

Pinterest Advertising

Pinning has become so popular and for those who advertise, nearly 30% have an annual income of over 100K. Realtors(R) can see an increase in their number of visitors if they sign up for Pinterest.

The boards are part of why Pinterest attracts so many people. Real estate agents can post pictures of their projects in boards to attract buyers and sellers.

Boards titled dream home, style and decor, city apartments and such attract many views that can lead directly to a real estate site.

Instagram Interactions

Instagram has over 300 million users. These users are active and like to participate in the conversation. What a better way to attract more clients than interact with them.

You can attract more followers by using the right hashtags and following the newest trends. Instagram users are always looking to follow trendy images.

Instagram often works by word of mouth. The user who sees your image might not be the one buying, but with the use of a button.

They can tell a friend “Click here” and the Realtor(R) can find a new client.

Ready to Advertise

It’s time to put these new skills to work and see your online real estate traffic increase. The use of Pinterest and Instagram will make your company more visually appealing.

Taking advantage of the internet is a smart way to create new advertising and marketing campaigns for your real estate company. And only pay for the advertising that will give you clicks and results.

If you enjoyed this article, check out the rest of the blog and learn a few more tricks