Ratios of debt to income give a quick rule of gold lenders to determine how much you can borrow. They try to maintain affordable loans, keeping the payments for a modest percentage of their total income. Ratios of debt to income, they can quickly find a reasonable monthly payment - and use that number to calculate the total amount of loans.

Ratio of debt to income - Housing expense

Its expense ratio of housing debt is a recipe for measuring the percentage proportion of their income to cover housing payments. Housing payments consist primarily of everything on your monthly payment - principal, interest, taxes and insurance (PITI).

Lenders set certain limits on where you want your income to debt ratios. For example, they might say they want for their housing costs may be less than 28% of your gross monthly income.

Example

Suppose you earn $ 3000 per month (gross, or pre-tax), and your lender wants its ratio of debt to income must be less than 28%

3000 x .28 = 840

Your lender wants to spend 840 dollars or less per month expenditure on housing.

The housing expense ratio is sometimes called the "front" ratio of debt to income and must be cautious in applying this principle.

Ratio of debt to income - a long-term debt for large periods

The ratio of long-term debt is a debt to income ratio measuring the percentage of their income that goes to all payments of debt. Include your housing costs, together with other debt payments (such as auto loans, credit cards and other debts).

As costs of housing, the mortgage lender sets a limit to how high they want its ratio of long-term debt.

The debt ratio in the long term is also referred to as the "back" to income ratio of debt. Because the conditions for both sides? Lenders print income ratios of debt to two numbers: 33/38. The 33 (in front) is the housing expense ratio, and 38 (in back) is the ratio of long-term debt.

Improving the income ratios of debt

Sometimes, borrowers have to apply jointly for a better yield ratios of debt so they can make all the payments. A couple will use both spouses often "income (which means that both are not legally obliged to repay the debt) in applications for loans.

Mortgage rates continued riding a seesaw this week, plunging one-third of a percentage point compared with the week before.
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The benchmark 30-year fixed-rate mortgage fell 33 basis points, to 6.44 percent, according to the Bankrate.com national survey of large lenders. This is a very nice according and a create a basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.35 discount and origination points. One year ago, the mortgage index was 6.34 percent; four weeks ago, it was 6.2 percent.

The benchmark 15-year fixed-rate mortgage fell 25 basis points, to 6.21 percent. The benchmark 5/1 adjustable-rate mortgage fell 21 basis points, to 6.46 percent.
Weekly national mortgage survey
Results of Bankrate.com's Nov. 5, 2008, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
30-year fixed
15-year fixed

5-year ARM
This week's rate: 6.44%
6.21%

6.46%
Change from last week: -0.33
-0.25

-0.21
Monthly payment: $1,036.41
$1,411.13

$1,038.58
Change from last week: -$35.97
-$22.57

-$22.85

Bankrate's survey is conducted weekly, each Wednesday -- and for six Wednesdays in a row, the benchmark 30-year fixed has zigged or zagged sharply in a direction opposite to the direction of a week before. This week the 30-year fixed fell 33 basis points compared to a week ago, but in last week's survey, it had risen 45 basis points compared with a week before.