Home Mortgages: What is a Debt-to-Income Ratio?
Learn what a debt-to-income ratio is and how lenders use it when reviewing your mortgage application. Mortgage lenders use a debt-to-income ratio (DTI) along with other criteria, including assets and credit score, to determine whether you’re a good risk for the loan you’re asking for. This ratio compares your overall monthly debt to your gross monthly income.
What Is a Fixed Rate Mortgage?
Ready to buy a home? Learn what a fixed-rate mortgage is and how it compares to its adjustable-rate mortgage counterparts. A fixed-rate mortgage, which is one of the most basic and popular types of mortgages, has an interest rate that is set when the loan is originated and does not change over time. “Fixed rate” only defines the type of loan and not the terms. For example, most fixed-rate mortgages have a duration of 15 or 30 years, but some lenders offer terms of 10, 20 or even 40 years. Occasionally, lenders offer fixed-rate mortgages with a term of five or seven years with a balloon payment for the balance due at the end. As you shop for your new home, learn more about fixed-rate and other types of mortgages so you are sure to make the right choice for your financial situation.