Tuesday, July 31, 2012

Household Debt a Key Factor in Texas Mortgages

According to the Texas A&M Real Estate Center, a Texas real estate buyer making $37,351 annually today can qualify for a 30-year, 80 percent loan in the amount of $150,000. 

Even with favorable interest rates and increased mortgage flexibility, the path to home ownership in Texas may still be a difficult one. In the article Dialing Down Debt: The Road to Recovery Begins at Home, real estate expert Gerald Klassen examines the impact of individual household debt levels on the real estate market. His findings paint a cautionary picture for the mortgage industry, the key to which may be shifting to focus on the deleveraging of debt prior to mortgage approval.

Deleveraging means that households reduce their liabilities by making balloon payments to reduce account balances or liquidate assets to reduce their number of monthly payments. In the past, deleveraging may have been considered a tactic of last resort in pursuing mortgage approval. However, as banks begin to focus more on the viability of mortgage applicants, debt-to-income ratio as a factor for mortgage approval stands to gain in importance.

If you are considering a home purchase, contact the Claus Team by phone at 210.566.6474 and speak to one of our buyers' agents about Texas' debt-to-income ratio requirements and actions you can take to help facilitate approval of your mortgage loan. 

You can also visit us online at www.theclausteam.com and use our mortgage calculator to estimate payments and begin exploring financing options.