How Much House Can I Afford in Springfield, MO?

So, I think, you know, we've covered most everything. One thing we haven't talked about that that is really confusing to people is debt and debt-to-income and what is that? How does it work? How does it affect people? Um if you know you've got some things you need to pay off, should you get pre-approved anyway? Like, what's a lender role in helping people determine A, what their their what I call DTI, debt-to-income, and and what would need to be paid off or not be paid off, how

all that works, and then what's included in debt? Is it, you know, my you know, my trash bill, my electric bill, or, you know, that kind of thing? You kind of want to give kind of the the overarching spiel on your debt to debt and DTI. Yep. Yep. So, debt-to-income, and the way that you would calculate that, you know, you mentioned trash bill or utility bills, those aren't debts. You might owe something each month, but there's not a a balance, hopefully. You're on time on

those things. But, it's like where you actually go and you take a loan out and that therefore generates a monthly payment. And one thing that that people can get confused on are like student loan payments that are deferred. Depending on the loan program, there's a lot of cases where it may be deferred and it may say $0, but depending on the loan program, the loan program, the government agencies may require the lender to actually count a monthly payment. So, that's why it's important to get with

us because you don't want to just assume like, well, I do I have $100,000 in student loan debt, but it's all deferred, it's zero payment, so you don't have to count any of that. Not necessarily. So, you take all of your monthly debts. This is also one thing that's been coming up a lot is like Affirm and Klarna and these things were like if you're going through an online retailer like Amazon for example, it gives you the option to not make the full payment but instead

make payments Yeah, the short-term options options. Yes, we asked that up front now because that's not going to come up on your credit report but it is going to show up on your bank statement and the loan programs do require the lender to count those payments into your debt-to-income ratio. Yeah. So we take all of your monthly payments for the debts that you have not utilities, not trash, not internet, just the things that you've actually taken a balance out on and then

there's a monthly payment generator cards, loan programs, things like that. Divide that by your income. Now, the nice thing is that we are able to use your gross income. Not what hits your bank account but most of loan programs allow us to use your gross income. So, I know that most people have health insurance taken out, they have taxes of course taken out, they have 401k contributions taken out. We're able to use your gross before those things are taken out. So you have your

monthly monthly payments, you can add that up or we can do it for you. We do it for people all the time. Add that up divided by whatever the monthly gross amount is. Now, if you're paid a salary, that's easy for us to calculate. If you're hourly but your hours kind of fluctuate, there's there's a certain way that all lenders are required to count that. And then, you know, of course we have bank statement loans for self-employed people. There's other special investment property loans, that's a

whole other thing that debt-to-income ratio is just it's different in those scenarios. Yeah. Yeah, and so if somebody's got, you know, credit card, say they've got, I don't know, 1,500 bucks on it and Yeah. and that's throwing their DTI off I know Adam in the past has been able to help people kind of resolve that in the loan process to get them closed and so Very, very common where they might have five different loans, or maybe 10 different loans, in order to

buy the house that they want and get the payment where they want it. Part of it might be maybe maybe they have some money to put down, but we have them put a little bit less down so they can use that those funds to pay some things off at closing. Mhm. And [clears throat] the benefit there is then we don't have to count those monthly payments into the debt-to-income ratio. I do tell people don't just I mean, if you've not started the home buying

process and you pay things off, that's fine. But if you've if you're starting the home buying process, you meet with us, we pre-qualify you, we actually encourage you to just make your normal monthly payment, and then we'll take care of paying those things off at closing because it's less documentation. Yeah. You send a check off a week away from closing to go pay something off. I know you're trying to be helpful for your lender, but the lender's got to wait for that check to

clear, for it to post, and then get verification from that provider that it's been paid off. And I've seen situations where that's delayed closing. Whereas if they would have just waited, brought that check in with them to the to closing the day of closing, then the title company verifies that it's going to get paid off, and we don't have to wait for the check to clear, to get posted, all those things. Yeah, we're we're all about smooth process in our world. We Ideally speaking, I

would like you to be like, man, you know, Zac and Adam, they didn't do a whole lot because we're doing it all on the back end cuz we're making it simple, right? And so that's the ideal world. We get into a long my my tangent about people that say we don't do a whole lot, but you know, a good realtor and a good lending partner, especially when they work together, should feel to you as a client like things went real smooth, right? And so Yeah.

Yep. But there's a lot of prep work and just a lot of knowledge that goes about how to do things so that you don't have issues that go into that. So,