Your Debt Ratio

What is your debt to income ratio?

Every time you apply for a credit or a loan, the lender must determine your debt to income ratio. This measures what percentage of your gross monthly income (everything before taxes are deducted) that goes towards paying off your debts. The debt to income ratio formula varies slightly according to the type of creditor or lending institution that you're dealing with. Your credit card company for example might accept a higher ratio as long as you make all of your payments on time.

Mortgages on the other hand are large, long term debts. In this case, most lenders will want to make sure that you are at the lower end of their debt to income ratio threshold. So, how does one go about calculating this important number? The easiest way is to divide the total of your monthly payments by your gross monthly income. For example, if your total debt payments are $500 with a $2000 per month paycheck, your debt to income ratio is 500/2000 = .25 or 25%.

So what does that number mean?

In general, the lower your debt to income ratio, the better. It shows that you have fewer obligations and are more likely to keep up all of your existing payments. A generally recommended ratio is 15%. All of your car loans, credit card payments, student loans and more should stay at 15% or less. Mortgage companies are looking for customers whose housing costs will probably be around 30% of their household income. This does not mean that you will be turned down for a home loan if you are at 40% or even 50%.

Clean credit beats DIR?

If you are very young and upwardly mobile, or live in New York City for example, it is possible that your debt to income ratio will always be above the recommended threshold. Most mortgage financing institutions will work with you to provide an appropriate loan product or an interest rate that will qualify you for a home loan. The cleaner your credit, they more flexible mortgage lenders will be when considering your entire financial profile. A large debt load with a consistent payment history can be better than a small debt to income ratio with an imperfect or poor credit history.

Do your homework and keep an eye on spending habits. In addition, use a good online mortgage calculator to ensure that you won't trade your future home ownership dreams for impulse purchases and credit card debt.

Source: rapidlingo.com

Sugar Springs - Quest for Quality Waterfront Lots

Waterfront lots in Sugar Springs Michigan and beginning to become something of an endangered species. Of course, there are still some out there, but they are becoming rare. Most of the choice lots have either been built on or are not currently on the market to purchase. Because of this, prices have skyrocketed!

I've noticed a trend in the past couple of years. Lots that had sold for $90,000 in 2002 are selling for $130,000 and up, today. One lot on main Lake Lancer sold for a whopping $200,000 this past September! Currently, there are two choice lots for sale from $189,900 to $240,000. Both of these lots are located on Lake Lancer. Other lots on the main Lake Lancer are going for $135,000 and up. Lots on channels are averaging $79,900 to $98,500.

Currently, there are no available lots for sale on the smaller lake (Lake Lancelot). The only lot for sale this fall on the main Lancelot is currently pending sale.

So, if you're looking for a waterfront lot in Sugar Springs in the near future, you'll want sign up for my auto email service at http://SugarSprings.GladwinRealEstateAgent.com/ss-info and get alerts when new listings become available. I've also recently written all of the waterfront lot and home owners, letting them know that I have several buyers looking for lots or waterfront homes. I've already gotten a few responses. Some many not list or offer them up for sale until after the first of the year or spring.

Also, for a list of Sugar Springs lots currently for sale, please visit http://SugarSprings.GladwinRealEstateAgent.com/waterfrontlistings

Housing Boom to Roll on for Years

According to TAMU Real Estate Center's News Release No. 66 At the beginning of the 20th century, less than half of all Americans owned their own homes. Today, low interest rates have pushed homeownership rates to a record 68 percent, and that figure is still climbing. Experts say it will exceed 70 percent by 2013. ... Millions more new homeowners are coming down the road. As many as 1.63 million new households could be formed every year for the next decade. That translates to 2.17 million new homes needed annually Wow!

Exchanging Real Estate Tax Free

Take a look at The Tax-Free Exchange Loophole : How Real Estate Investors Can Profit from the 1031 Exchange by Jack CummingsRealty Barron talks about how you can Exchange Real Estate Tax Free using 1031 exchange. The claim " ...it can keep you from losing tens or hundreds of thousands of dollars in unnecessary taxes and loss of growth. ... The 1031 exchange is named after section 1031 of the IRS tax code. Basically, it allows you to exchange an existing investment property for a different investment property without having to pay capital gains taxes on the transaction. This applies to any investment property including rental houses, raw land, business property, commercial real estate, condos, apartments, etc. .. You can roll the profit from the sale of an existing property into the purchase of the next. Not only does this save you from having to pay capital gains taxes in the short-term, it can also preserve the ability of appreciated property to receive a step-up in basis at death which can eliminate those taxes altogether" Worth keeping in mind ...

Good Books

Download - Dowloandable ebooks include:
Download and read on the go ... Buy, Rent and Sell: How to Profit by Investing in Residential Real Estate by Robert Irwin, [A guide to making profitably residential real estate investments, offering strategies real estate professionals have been using for years.

Offers tips for those looking for a quick return, as well as those who would like a source of long-term income and growth investment, showing how to save on taxes and other expenses], Real Estate Loopholes: Secrets of Successful Real Estate Investing by Robert T. Kiyosaki (Foreword), Diane Kennedy, Garrett Sutton, The Complete Book of Home Inspection [ADOBE READER] by Norman Becker (if you're starting out, this one is especially worth having on portable device, to allow you easy reminders of what to look for as you inspect or look over properties ... of course ASHI inspectors would want to supplement this with more elaborate Home Inspection resources like Home Inspection: A Guide for Professionals by Marcia Darvin Spada -- which "takes you step-by-step through the entire process of home inspection following the most current guidelines established by the American Society of Home Inspectors, Inc").