FINANCIAL HOUSEKEEPING | Save money over the summer
With school out, summer offers many opportunities for families to save a few dollars, rather than running up a host of new bills paying for things the kids don’t use or do during the school year.
Tomorrowsmoney.org – an educational website created by the Bond Market Association – has created a new list of tips and ideas for saving money and helping your finances during the summer. The list includes everything from vacation-planning tips to car-buying advice to considerations for staying cool. It’s a good checklist for consumers looking to get ahead while making the most of their time. To get to the list, visit tomorrowsmoney.org/youngpeople/section.cfm/400/498.
SHORT COURSE | Debt-to-income ratio
A key ratio in determining how much house a buyer can afford, the debt-to-income ratio is a comparison of gross income to housing and nonhousing costs.
Federal Housing Administration standards for the level of debt to income advise that a monthly mortgage payment be no more than 29 percent of gross monthly income, and that the mortgage payment plus all nonhousing debts – car payments, credit debt and the like – not exceed 41 percent of income.
Typically, lenders want to see ratios that are even better and figure that a debt-to-income burden of more than 25 percent will leave the buyers strapped for cash, even if they can afford to buy the home.
