Several factors can affect your mortgage application other than your credit score. A typical mortgage company in cities like Johnson City will also look at your debt-to-income (DTI) ratio to see if you’re qualified for a loan. But what if your debt-to-income ratio is not in its ideal condition?
Luckily, we’ve summarized all the essential tips on how to reduce your DTI ratio as quickly as possible.
Refinance your existing debt
One way of efficiently reduce your existing debt is by refinancing. Refinancing is a great way to invigorate your DTI ratio, which can also lower your interest rate. And as soon as you’ve reduced the interest rate, then you’ll have more funds to pay the principal balance.
Create a strategy
You should try to create a plan to help reduce your monthly debt payments. If you add pay a bit more than the minimum amount required, then the extra amount will be applied directly to your principal balance. It may not seem a lot, but it’ll be quite a big help once your over payments accumulate over time.
Look for an extra source of income
Another way of managing your DTI ratio is by creating additional revenue. There are several ways on how to increase your salary. A few means would be increasing your job salary or even offering your assistance independently. You may try to sell your skills to clients as a side gig to raise your income each month.
Another way to get some extra funds is by working as a virtual assistant. You may do it at home once you get out of work. A virtual assistant basic salary ranges from $8 to $30 per hour.
Your debt-to-income ratio has a significant effect on your loan approval. That’s why it’s crucial to manage it before you start submitting your mortgage application.