“Dear Steve,
I’m not sure of the exact score, but my daugher’s (She is 26.) credit is good. She was in the process of trying to purchase her first home and was pre-approved for $100,000. Once into the process, she was denied because she had too much debt (student loans, car lease, credit card). She has a fulltime teaching job, still lives at home, and has no utilities or rent. She only has the car lease, student loans, and credit card to pay.
What other options might she have in purchasing her own home?
Carol”
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The Answer
Dear Carol,
Thank you for contacting me.
So the statement about too much debt would indicate her debt to income ratio is out of wack.
Typically the backend ratio for a mortgage was 36%. This means that all the debt obligations, including the new mortgage, can’t be more than 36% of the monthly take home income.
Can you give me some additional details about her income and expenses?
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