Ethan Ewing, President of Bills.com, explains debt to income.
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in this dollars & sense video ethan ewing, president of bills. com, explains the debt to income ratio. commonly referred to as d.t.i. this mortgage term is used when speaking to a mortgage lender, a loan officer, or a financial planner. debt to income is usually represented in the form of a percentage. visit bills. com or by clicking here for a free mortgage rate quote and to receive more information.
"hi, my name is ethan ewing and i am the president of bills. com, i want to talk to you today about a very common mortgage term called debt to income, you will hear this all the time when you talk to a mortgage lender, mortgage broker, your bank, whatever it is, about refinancing your house or purchasing a new home. debt to income simply is the amount of debt you have, and this is monthly payments, so imagine you have $200 a month that you are making in credit card payments, $300 dollars a month that you are paying on car payments and call it $1,000 a month you are making on your current mortgage payment, that is $1,500 in debt, those are your monthly payments.
on the other side of that is your income, so you make $60,000 dollars a year, that is effectively $5,000 a month. you basically calculate that $1,500 into that $5,000, your debt to income is 30%. your debt versus your income is 30%. it is a very important term, underwriters when they are looking at new loans look at this very closely, and itâ’s a big deal they have to make sure youâ’re going to be able to afford your monthly payments moving forward. hope that helps, we'll see you next time."