Many people we talk with can’t actually qualify for a mortgage because their debt-to-income ratio is too high. This could be because of their high amounts of debt or recently-decreased income — but either way, a high debt-to-income ratio causes all kinds of problems when trying to qualify for a mortgage.
If your income has decreased in recent years – there isn’t a special program to help you increase your income — it is simply a matter of getting more “money in the door” so to speak.
But…
If you have a large amount of debt, there is something new called debt settlement that seems to be catching on with people who have a large amount of unsecured debt.
The process of debt settlement essentially works like this (although there is way more to it, I am sure — we don’t actually help people with debt settlement)
- Stop paying your monthly payments to your credit card company
- Hire a debt settlement firm to negotiate your debt lower than what you owe
- Pay monthly payments into an escrow account
- When there is enough money in the escrow account, the settlement firm reaches a settlement with your creditors
Is debt settlement helping people? Here are just a few of the benefits of debt settlement:
- Reduce total payments by up to 40%
- One easy monthly payment
- Manage calls by debt collectors
- Debt free in as little time as 12-60 months
- Reduce or even eliminate charges such as interest or late charges
So if you find yourself in the process of applying for a mortgage and you are having problems with a debt-to-income ratio that is too high, now you know at least one more option that is out there that may help you get it in line.
{ 5 comments… read them below or add one }
You do have an obligation to pay your bills to your creditors. You have a contract with them. You can’t just stop paying your bills because you don’t want to pay them. That would be fraud. My opinion is the debt negotiation is for those that are in financial crisis and considering bankruptcy.
A lot of debt negotiation companies may tell you to just stop paying your credit cards. If you have the ability to pay your creditors and you do this, you could get sued.
Be sure to Google the name of the company you are interested in signing up with before you start sending them your money. It is a great way to see if there is a mountain of complaints before you sign your life over.
Most people aren’t willing to take an honest look at their over all budget. In order to save money each month, means life style changes and that can be very hard for some to do. They had better do something. A debt settlement may be the answer. thanks
Just wanna say thank you for the information you have shared. Just continue writing this kind of post. I will be your loyal reader. Thanks again.