 Does your
credit report tank? If your FICO score is below 620, you're not going to
receive a good interest rate for a loan and, in fact, that kind of
score could dump you into the hands of a predatory lender. Not a good
sign.
Consider High Debt Ratios
Lenders consider two ratios: front-end
and back-end. The front-end is your mortgage payment, plus taxes and
insurance divided by your monthly salary. The back-end adds your monthly
debt payments to your PITI payment.
Your PITI (Principal, Intereest,
Taxes, and Insurance) is the calculation of what makes up mortgage’s
monthly payment, the figure you must be able to pay if you want to own
that home.
A high debt ratio means
you may not qualify for the loan. If you should find an unscrupulous
lender that is willing to fund such a loan, you may not be able to
afford to feed yourself, even if you eat dirt.
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