Matt Goeglein

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Real Estate Terms: The ‘Debt to Income’ Ratio and How It Affects Your Home Purchase

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Real Estate Terms: The 'Debt to Income' Ratio and How It Affects Your Home PurchaseThe real estate market is rife with terminology that can make a home purchase seem more than a little complicated. If you’re currently looking for a home and are considering your loan options, you may have even heard the term ‘Debt to Income’ ratio. In the interest of simplifying things, here are some insights on what this term means and how it can impact your home investment.

Determining Your ‘Debt to Income’ Ratio

It’s important to consider what exactly your DTI ratio is before your home purchase as this will quickly determine how much home you can actually afford. To calculate this number, take your monthly debt payments – including any credit card, loan and mortgage payments – and divide them by your monthly gross income to get a percentage. In the event that your monthly debt is $700 and you make $2800 in income, your DTI is 25%.

What Your DTI Means To The Bank

The DTI is a very important number when it comes to a home loan because it enables the bank to determine your financial situation. A DTI of 25% leaves some wiggle room, as most banks will allow a DTI percentage that runs between 36-43%. In the case of the above example, this means that the most debt this person could take on per month is about $1200. While banks vary on this percentage, credit history plays an important part in the DTI that will be allowed.

Paying Down Your Debt Or Purchasing A Home

In the event that you have a DTI ratio that exceeds what your bank will allow, you will need to consider your debts before moving on to investing in a home. If you’re planning on purchasing a home in the next year, it’s a good idea to tackle high-interest debt first. However, if you happen to have a chunk of money saved up that you’re planning on putting into a down payment, it’s worth considering that putting more than 20% down may slightly increase the DTI percentage your bank will accept.

There are many fancy terms that go along with the world of real estate, but it’s important to understand what they mean so you can make them work in your favor. If you’re calculating your DTI ratio and are planning a home purchase down the road, you may want to contact one of our local real estate professionals for more information.

The Top Tips for Saving Money On Energy Bills

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The Top Tips for Saving Money On Energy BillsThere are many homeowners who are looking for ways to reduce their monthly expenses. One way to do that is to target energy bills and expenditures. Homeowners might be able to make a few changes and upgrades to their homes, which could reduce utility bills and improve energy efficiency. What are a few ways to do exactly that?

Consider Making The Switch To LED Lights

One of the first changes homeowners might want to make is to switch to LED lights. LED lights are newer lights that can last many times longer than traditional lightbulbs. It is not unusual for homeowners to save $75 per year on energy costs by switching older incandescent lightbulbs to LED bulbs. Talk to a local contractor or professional about some of the top LED bulbs available today.

Seal Leaks Around Doors And Windows Throughout The Home

Heating and cooling expenses are some of the biggest energy expenditures that people have. By sealing a few leaks throughout the home, it is possible to save up to 20 percent on heating and cooling costs. There are small leaks that could be present around the doors and windows. By sealing these leaks using caulk, homeowners can trap heat and air conditioning in the home, removing stress from the HVAC unit. Homeowners should also consider sealing leaks around lighting and chimneys.

Invest In A Smart Thermostat

It is also possible for homeowners to save money by investing in a smart thermostat. Homeowners should consider using this thermostat to reduce the amount of work performed by the HVAC unit when people are at work or asleep. That way, the heating and cooling system doesn’t work as hard when people aren’t home (or are asleep).

Perform Routine Maintenance On Time

Finally, homeowners need to make sure they perform routine maintenance on their HVAC systems on time to reduce energy expenses. For example, the filters might get clogged, forcing the HVAC system to work harder to heat and cool parts of the home. By investing in maintenance, the HVAC system will operate at peak efficiency, which will reduce energy bills. This will also extend the life of the HVAC system efficiency, which might allow homeowners to put off replacing it.

Homeownership And The American Dream: Is It Changing?

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Homeownership And The American Dream: Is It Changing?There are a few parts of American culture that people believe define this country. One element is the dream of homeownership. There is a strong belief that people need a place to call home. Therefore, since the dawn of this country, the government has tried to incentivize people to purchase a home.

At the same time, there are some people who are looking at the younger generation, wondering if this American Dream is starting to change. Is homeownership still a part of the American Dream?

Americans Still Believe In The Idea Of Homeownership

Hard work and owning a home appear to be inseparable. There is still a belief that as long as people work hard and save money, they can fulfill the American Dream by buying a home. Real estate professionals regularly take surveys that show that people still want to be a homeowner for the sake of owning a home. While it is true that owning a home provides more control and creates investment opportunities, owning a home still has an allure to people that is undeniable.

Millennials Want To Own A Home As Well

Millennials appear to believe most strongly in owning a home, indicating that this is still a part of the American Dream. Even though some people thought that millennials were simply going to rent forever, this is not the case. The reality is that many young adults have not purchased a home because they could not afford one. Student loans and a lack of wage growth compared to housing increases simply made it harder. With interest rates lower than they ever have been in the past, many young adults are ready to make the jump to purchase a home.

Homeownership Is Still A Part Of The American Dream

Ultimately, many millennials simply put off the idea of getting married and having children, so they put off the idea of homeownership as well. Now that this milestone has arrived, there are many young adults who are looking to purchase a home for the first time. This indicates that owning a home is still a key part of the American Dream.

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