Last Updated on 08/09/2019 by GS Staff
[otw_shortcode_dropcap label=”Q:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] What is non-mortgage debt?
[otw_shortcode_dropcap label=”A:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] Non-mortgage debt is debt that is not related to a mortgage liability. This debt includes credit cards, student loans, car loans, personal loans, and other non-mortgage related liabilities.
If you are applying for a mortgage, the lender will look at both your non-mortgage and mortgage debts. The lender (underwriter) will review things like your payment history, how well your credit is established, and your monthly debt payments in relation to your income.
To determine if you have enough income to meet your debts, the lender will calculate your debt-to-income ratio. This is calculated by taking your total monthly debt payments divided by your total monthly income. The total debts include your non-mortgage liabilities, mortgage liabilities, and rent if you will still be paying it after the loan closes.
The Seattle Times recently reported that, “Northwestern Mutual’s recent 2017 Planning & Progress Study showed that nearly half of Americans are carrying at least $25,000 in debt with the average debt load standing at $37,000.” This debt is non-mortgage debt according to the article. The article goes on to state that 1 in 10 people have over $100,000 in non-mortgage debt.