Sharon Schammel & John Wild
July 2022
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** Pacific Palisades & L.A.'s Westside **
Residential & Estate Properties

What’s a Good Debt-To-Income Ratio?
You’ll see the term debt-to-income ratio a fair amount if you're applying for a mortgage. Debt-to-income ratio is also known as DTI.
      This is a measure of your monthly debt payments divided by your gross monthly income.
      Lenders use DTI and your credit history to determine whether or not you can repay a loan. Every lender will have its own DTI requirement.
      Calculating Your DTI A lender wants to see a low DTI because this shows them that you’re more likely to be able to manage your monthly payments successfully.
      When you have a low
U.S. averages as of July 2022:

30 yr. fixed: 5.81%
15 yr. fixed: 4.92%
5/1 yr. adj: 4.41%

debt-to-income ratio, it’s a healthy balance between your debt and how much you're making. The lower this percentage, the higher the chances you’ll get a loan or line of
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The Top Reason People Get Turned Down for Mortgages
     The idea of getting turned down for a mortgage is anxiety-producing for many people. Despite having risen significantly in the past few weeks, mortgage rates are still somewhat low, and so increasingly, people are looking to jump into the market before they go much higher.
      That leaves them wondering whether or not they’ll be approved.
      Only around 8% of mortgage applications were denied in 2020, according to a NerdWallet study. However, there were 58,000 more denials in 2020 than in 2019. Some of that was due to the uptick in applications in 2020.
      So what was the number one reason for denials?
      The Leading Reason for Mortgage Denials The most

Is the Housing Market In a Correction?
     According to analysts, the housing market shows signs that it might be in a correction, so what does this mean for prices? How will it affect both buyers and sellers?
      Mortgage rate demand has been spiraling, and at the same time, home prices are still rising. These two converging factors are partially why experts are predicting the real estate market is either on the cusp of a correction or already in one.
      Home sales are declining, and fewer buyers seek mortgages because they can’t afford interest rates, home prices, and inflation. Real estate agents are already reporting smaller bidding wars, and sellers are cutting prices.
      Prices have started falling in some parts of the country.
      Mark Zandi, who serves as chief economist at Moody’s Analytics, believes a correction has already begun. Zandi says there

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Why Are Loan Requirements Different for a Rental Property?
     One might think that a home loan is a home loan. And generally speaking that's correct. Lenders review a loan application and begin the approval process. The lender looks at qualifying income, credit and assets among other things. But overall the process is the same for most all types of home loans. But with a rental property, there are some things that are different when compared to a mortgage for an owner occupied unit.
      The first thing one will notice is how much down payment is required for a rental. While a conventional loan asks for a minimum down payment of 5%, and even 3% in some cases, a loan for a rental property can be as high as 20% or more. And, interest rates for rentals are higher compared to a primary residence. Rates can be as much as 1-2% higher for a rental. Further, first time buyers are limited to a primary residence and not eligible to finance a rental as their first buy. A higher credit score will be needed for a rental as well.
      So why is that? Why are there differences between loans for a primary residence compared to a rental unit? The answer is due to elevated

California Area Market Conditions Today

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Sharon Schammel & John Wild
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Pacific Palisades, CA 90272

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