Question about interest rates on 3% and 5% Conventional loan.

[Ragelog]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous wrote:

@Anonymous:

When you say your DTI is $45, I think you may be confusing DTI for credit utilization, which happens a lot. The two terms are not interchangeable and are not synonymous. DTI is the percentage of a consumer's monthly gross income that goes toward paying debts.  DTI often covers more than just debts; it can include principal, taxes, fees, and insurance premiums as well.

From the CFPB: "To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out.  For example, if you pay $1500 a month for your mortgage and another $100 a month for an auto loan and $400 a month for the rest of your debts, your monthly debt payments are $2000. ($1500 + $100 + $400 = $2,000.) If your gross monthly income is $6000, then your debt-to-income ratio is 33 percent. ($2000 is 33% of $6000.)"

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Well no, I get that they are different my DTI is a little under 1 percent and my utilization is about 2 percent.  To give a litle more info, my car and student loans have been paid off for years. I have no other loans. I have the 6 cards in my signature,  4 of which were at 0 and 2 of which had balances of $8.00 and $952.00 when he pulled my credit. The minimum  payment on those two cards are the only debts that he included in my DTI. I simply do not owe anything else. Oh wait,  I do pay rent ( 825.00),  but I assumed that wasn't included because it goes away when I buy a house. 

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Gotcha. DTI does include the PITI from the new mortgage though. So be sure to include the new estimated mortgage in your DTI calculation.

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DTI is possibly the issue as I estimate a mortgage payment with 5% as $1829.09 per month using 1.25% for Property Taxes, .45% for Home insurance and your .89% for PMI.

That combined with your credit card debt puts you just under 50%. So maybe that is causing the higher rate.

[Anonymous]

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@Ragelog wrote:

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@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

@Anonymous:

When you say your DTI is $45, I think you may be confusing DTI for credit utilization, which happens a lot. The two terms are not interchangeable and are not synonymous. DTI is the percentage of a consumer's monthly gross income that goes toward paying debts.  DTI often covers more than just debts; it can include principal, taxes, fees, and insurance premiums as well.

From the CFPB: "To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out.  For example, if you pay $1500 a month for your mortgage and another $100 a month for an auto loan and $400 a month for the rest of your debts, your monthly debt payments are $2000. ($1500 + $100 + $400 = $2,000.) If your gross monthly income is $6000, then your debt-to-income ratio is 33 percent. ($2000 is 33% of $6000.)"

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Well no, I get that they are different my DTI is a little under 1 percent and my utilization is about 2 percent.  To give a litle more info, my car and student loans have been paid off for years. I have no other loans. I have the 6 cards in my signature,  4 of which were at 0 and 2 of which had balances of $8.00 and $952.00 when he pulled my credit. The minimum  payment on those two cards are the only debts that he included in my DTI. I simply do not owe anything else. Oh wait,  I do pay rent ( 825.00),  but I assumed that wasn't included because it goes away when I buy a house. 

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Gotcha. DTI does include the PITI from the new mortgage though. So be sure to include the new estimated mortgage in your DTI calculation.

---

DTI is possibly the issue as I estimate a mortgage payment with 5% as $1829.09 per month using 1.25% for Property Taxes, .45% for Home insurance and your .89% for PMI.

That combined with your credit card debt puts you just under 50%. So maybe that is causing the higher rate.

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Okay I'm starting to get what both of you are saying. It's the amount of the loan vs. my salery that's making the interest rate higher. Even though I don't technically have a mortgage now they use the presumed mortgage amount in configuring my DTI. I am engaged and my fiance makes significantly more than I do, but a new job and lates on student loans and a credit card a few years ago made it a better idea for me to do the loan on my own. The homes we've been looking at have been in the 250,000.00 range, so I think the mortgage payment would be closer to 1600 to 1700.