What to do

We have a high debt ratio, but our credit is good. We have tried to refi our existing mortage, but can't because of debt ratio. We owe a large amount on credit cards, etc. What can we do short of bankruptcy, or is this our only option?

Hi,

Welcome to the Forums…!!

Yes, refinancing your home mortgage loan is certainly difficult with a high DIY ratio and more so if you have accumulated a huge amount of credit card debt. Though bankruptcy may be one of the solutions and it may give a fresh new start to your life, but it is not the only solution. Bankruptcy may have a catastrophic impact on your credit score and therefore it is a much-avoided option, as per financial experts.

Instead of filing bankruptcy, you may resort to the ways in which you can lower your DIY ratio. Firstly, try and increase your income resources, working some overtime or looking for some salary boost. You can also try generating money from a hobby. The more you’re able to boost your monthly income, the lower will be your DIY ratio. You can also utilize the proceeds in paying off your credit card debt.

Secondly, you must concentrate on repaying your high interest creditors. Once your debts are paid off, you can witness a drop in your DIY ratio automatically. However, while you’re repaying your debts, your DIY ratio may temporarily increase as a large part of your monthly income will go towards paying off your debts. But as you complete the process you can successfully lower the ratio and qualify for a mortgage refinance.

Hope this helps..!!!

Tightening up your budget and paying down the debt is the best way to keep your good credit. And your home.

Cut the cable...or reduce it down to basic. Get netflicks.
If you have cell phones, drop the land line.
Give up eating out....take lunch to work...make your own coffee at home and forgo the morning starbucks. My $2.00 Einsteins travel cup is my morning best friend. Dont pay $1.00 or more bottled water or soda at work...take it with you.

COUPONING....never go shopping without your stack of coupons.
Check out Coupondiva.com and thcouponclippers.com Examples of savings include 6 boxes of Gain dryer sheets at 12 cents each and 12 boxes of Finish dishwasher tabs for about 25 cents each.


Thift stores for clothing.....since moving to florida and having to live on a tight budget, I have not bought a single piece of new clothing except for the undergarments. I could not afford to pay "new" prices for the clothing I am wearing. Both of my purses, one a Coach and the other Louis Vuition, (both authentic) are from Goodwill. Both under $25. My real crocs were brand new with tags, $3.00. My daughter wears Ralph Lauren Polos to school I paid $1.00. She carries a cute Kate Spade purse...$10 with a cute wallet that cost 99 cents.

I have a coupon pouch in my purse that goes with me everywhere. I research coupons before I go out shopping. Our food budget for 2 people is $200 per month (she gets free school lunch and I pack my lunch) We eat healthy and fresh foods all cooked at home. We eat out once a month, usually on a coupon. We go to the movies every other month...I get a free movie ticket at the bloodmobile every 56 days...a friend goes with me and always gives me his ticket.

Welcome evaredmond,

With a high debt to income ratio, it will be impossible for you to get a mortgage refinance. In order to lower your debt to income ratio, either you need to increase your income or you need to pay off some of your debts in full. In order to increase your income, you need to look out for part-time jobs. In case, this option is not open to you, then you may have to file bankruptcy.