MONEY TRICK TO BUY MORE REAL ESTATE

28 Nov 2022

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Pay off a car loan before applying for a mortgage instead of using all your down payment. Removing a $700 monthly payment can increase how much you qualify to borrow by over $100,000, since lenders look at your debt-to-income ratio.

Questions this video answers

$500,000

$50,000 (10%)

$25,000 balance and $700 per month

Use half of the down payment to pay off the auto loan, eliminating the $700/month payment

Over $100,000 (claimed)

I'm going to teach you a simple money trick that very few people talk about. You see, when you're buying a property and getting a home loan, the lender is going to look at the total of all of your monthly payments. Then they compare this figure to your income to come up with your debt to income ratio. This is how they calculate how much you could afford to buy. So let's say you're going to buy a $500,000 house and put $50,000 down, which is a 10% down payment. But at the same time, you have an auto loan that's $25,000 balance and $700 per month. You would be better off to use half of your down payment money to pay off that auto loan and get rid of that $700 a month payment. Now, doing this frees up $700 so you can afford more of a home at today's rates. This would increase your home purchasing power by over $100,000.