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.
video transcription;
"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."
Mortgage market: a pulse check
Mortgage rate fluctuations should come as no surprise. If you are buying a home or refinancing your existing mortgage, it is important to stay informed about the current mortgage rates.
Mortgage rates April 10, 2024
According to Freddie Mac, the 30-year mortgage rate for the week of April 10, 2024 is 6.88%. This represents a 6 basis points increase from the previous week's rate.
Note: A basis point is equal to one-hundredth of one percent (0.01%). In numerical terms, if the mortgage rate changes by 20 basis points, it means the rate has changed by 0.20%.
According to Freddie Mac, the 15-year mortgage rate for April 10, 2024 is 6.16%. This is a 10 basis points increase from last week’s rates.
What does the mortgage rate mean for you?
Mortgage rates play a vital role in determining your monthly payment. Let's take a look at the avergage interest rates (APR) for April 14, 2024 based on Zillow data for borrowers with a high credit score (680-740) in the United States:
- For a 30-year conventional loan, the interest rate is 7.09%.
- If you opt for a 15-year conventional loan, the interest rate stands at 6.29%.
Using the rates mentioned above, a $279,082 30-year-year mortgage would result in a monthly payment of $1,874. On the other hand, a 15-year mortgage would require a monthly payment of approximately $2,399.
Simplify your mortgage journey: Shop around and get pre-approved today!
To make the home-buying or refinancing process a breeze, we highly recommend shopping around for mortgages and getting pre-approved. So, why not Check Out mortgage rates now for the best options available.
