Debt is usually bad, but it can be beneficial in certain areas. Examples are home mortgages and car loans. These loans are for large purchases so most people need to finance them. However, you need to make sure the interest rate makes sense. If the loan is high risk and high interest, it needs to be avoided. 0% offers are great but you need to read the details…How soon does it last? What is the new rate? Do you pay for the % time frame if not paid off, does late payment trigger a clause to cause you to pay interest on the whole amount? There are many things to consider…bottom line high interest is bad. Credit card debt is bad. Buying a home, we will review the ratio you should be maintaining to be fiscally sound.
Some of the areas we will cover
- Debt to Income- This is the total debt/income. Most lenders consider a ration of less than 43% good.
- Front end ratio (28%)- This is mortgage debt/total income. This is considered the top level. Any higher and you are considered high risk. Mortgage lenders use it in approval process.
- Back end ratio (36%)-This is mortgage debt, taxes, insurance/total income. This is considered the top level. Any higher and you are considered high risk. Mortgage lenders also use it in approval process..
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Please reach out to info@fiscalinvestor.com with any concerns you may have. We look forward to hearing from you.