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Calculating Debt for Debt to Income Ratio

Debt to Income Ratio:  To calculate debt, I included house payment, all utilities (garbage, water, sewer, gas/electricity), personal insurances (life, car,etc.), phone, cable, etc.  The ratio was high.........is this the correct way to do it?
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August 18 2010 - Elk Grove
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You'll be close with calculating all your Minimum Monthly Obligations on your Credit Report, including your Total Monthly Housing Expense, PITI & HOA Dues, if applicable. .... Happy funding, Rudi
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August 19 2010
Your debt ratio would include your mortgage payment(s), property taxes, homeowners insurance, association fees (if applicable) and mortgage insurance (if applicable), as well as installment loans (cars, student loans, unsecured bank loans, second home or investment property loans), credit cards, alimony or child support.

You will not need to include your utilities and insurance policies not related to your home.  This should bring things down quite a bit.
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August 18 2010
This may make it easier:  Include any payments that are and would be on your credit report.  Don't get discouraged if it comes out high.  Depending on the type of mortgage you are interested in, some brokers have access to lenders that will allow a debt-to-income ratio as high as 60%.

If you come up with a figure higher than that, I would still recommend consulting an experienced broker who can double-check the numbers for you who may be able find other ways of boosting your income like adding back in depreciation, for example.

Good luck!
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August 18 2010
Debt to income ratio will not count ANY of the items you mention except for house payment.    Debts are loans (mortgage, credit card, car loan student loan).   Debt to income ratio counts your housing expense, plus any other loan monthly payments you are required to make.

The items you mention are services not debts.
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August 18 2010
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No, that is not the correct way to do it.  Debt in this calculation is not the daily/monthly expenses (utilities, food, etc) but the big items that you've obtained and for which you are paying for over the next months or years. 

Some examples of debts are student loans, property loans, car loans, consumer debt (amount you owe on your credit cards and.or other consumer loans),  alimony, boat payments, second home, your helicopter etc.  

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August 18 2010
 
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