Many people we talk with can’t actually qualify for a mortgage because their debt-to-income ratio is too high. This could be because of their high amounts of debt or recently-decreased income — but either way, a high debt-to-income ratio causes all kinds of problems when trying to qualify for a mortgage.
If your income has decreased in recent years – there isn’t a special program to help you increase your income — it is simply a matter of getting more “money in the door” so to speak.
If you have a large amount of debt, there is something new called debt settlement that seems to be catching on with people who have a large amount of unsecured debt.
The process of debt settlement essentially works like this (although there is way more to it, I am sure — we don’t actually help people with debt settlement)
- Stop paying your monthly payments to your credit card company
- Hire a debt settlement firm to negotiate your debt lower than what you owe
- Pay monthly payments into an escrow account
- When there is enough money in the escrow account, the settlement firm reaches a settlement with your creditors
Is debt settlement helping people? Here are just a few of the benefits of debt settlement:
- Reduce total payments by up to 40%
- One easy monthly payment
- Manage calls by debt collectors
- Debt free in as little time as 12-60 months
- Reduce or even eliminate charges such as interest or late charges
So if you find yourself in the process of applying for a mortgage and you are having problems with a debt-to-income ratio that is too high, now you know at least one more option that is out there that may help you get it in line.