Easy Guide to Using Your Debt to Income Ratio Calculator

Easy Guide to Using Your Debt to Income Ratio Calculator

Share
Easy Guide to Using Your Debt to Income Ratio Calculator
What is the Debt to Income Ratio Calculator?


A debt to income ratio calculator is a free resource used to tabulate the ratio of your gross monthly income versus your recurring debt payments, such as your car loan, your mortgage or rental payments, child support payments, insurance premiums, student loans and all other expenses that are debt-related and require a monthly installment. 
Your debt to income ratio is a valuable number; many financial experts say it is as important as your credit score. As a general statement, the debt to income ratio will reveal the amount of debt you have as compared to your monthly income. That being said, the debt to income ratio calculator is simply the free tool, which can be found online, that will expedite the calculation. 
Lenders often look at your debt to income ratio when they are attempting to decide whether to lend you money or extend your credit line. A low debt to income ratio will reveal that you have a good balance between your debts and monthly income. As you might imagine, a lender will like this number to be low; in a general sense, you will want to keep your debt to income ratio below 36%.
Using your Debt to Income Ratio Calculator: 
A debt to income ratio calculator is a simple tool that only requires you to enter three variables. Before utilizing the debt to income ratio calculator, however, you must first add up all of your monthly debt obligations. 
These debts, often referred to as recurring debt payments, will include your mortgage (if you are a homeowner) and all variables associated including interest, taxes and insurance, as well as home equity payments. If you are renting a place simply include your monthly rent amount. 
In addition to costs associated with your place of residence, you are required to tabulate those monthly expenses tied-into your car loans, cell phone bill, student loans, your monthly payments associated with your credit cards and all other loan payments that you may have. 
When you have tabulated this number enter the figure into the first component of the debt to income ratio calculator. After you have entered this number, you must then enter your gross monthly income, meaning your income before taxes are taken from your paycheck. After you have submit this information simply click “calculate” on your debt to income ratio calculator and the resource will calculate your debt to income ratio as a percentage figure.

Comments

comments

Share

Related Articles

Read previous post:
Fair Debt Collection Practices Act

Close