arienjaan.com » Finance http://arienjaan.com Fri, 03 Sep 2010 22:33:31 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 Evaluating your Eligibility for VA Loans: Your Debt to Income Ratio http://arienjaan.com/evaluating-your-eligibility-for-va-loans-your-debt-to-income-ratio/ http://arienjaan.com/evaluating-your-eligibility-for-va-loans-your-debt-to-income-ratio/#comments Sat, 26 Jun 2010 10:53:31 +0000 http://arienjaan.com/?p=180 When applying for VA loans, you have to be closely evaluated for eligibility. Part of this eligibility is a check up on your debt to income ratio.

The VA has a list of guidelines in evaluating whether a borrower qualifies for the loan he is after. One of the rules is that your debt to income ratio should indicate the ability to meet the costs of maintaining the loan and the home. Your debt to income ratio should show that you are financially capable of home ownership. This background check is also for your advantage; the VA wants to ensure that veterans don’t make the wrong decisions with VA loans that they take out.

Your debt to income ratio is calculated in this manner:

First, your overall mortgage payme nts are summed up. This would include your principal loan amount, the interest, any escrow tax deposits, any insurance dues for potential hazards found in your home, homeowner’s fees, and so on.

This sum is then added to all your monthly debt expenses, which may include but are not limited to credit card payments, car loan payments, personal loan payments, and student loan payments.

The total amount of the two classes of expenses or debts is then divided by your gross monthly income.

If the resulting ratio falls within the 41% mark, you can qualify for VA loans. However, if the number goes over 41%, your debt to income ratio does not work towards your favor.

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    To avail the same, a mortgage broker will always force you to get the higher loan amount, so that they are able to get more commission. All you need to do is to cop with such typical situation. Your application for mortgage refinancing is placed by the mortgage broker to a wholesale mortgage lender. Your application gets approved by those lenders at a particular rate of interest. The wholesale lender provides a rate sheet to the mortgage broker, and the broker claims a commission from the lender on the basis of the rate. The amount of commission you are paying the mortgage broker to dispose the loan, is in addition to the commencing fee. Ultimately, the broker is being paid twice from your end, for their daily work, and for getting you the loan.

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