How do I calculate debt-to-income ratio?
The process of finding the right solution to a person’s debt problems can be very frustrating and emotionally challenging, and it can be mentally exhausting, particularly if you don’t have the right knowledge. You may need to know how to calculate debt-to-income ratio (or some would ask how to calculate debt ratio) if you are looking to refinance your mortgage, as an example. That’s where a Certified Credit Counselor at InCharge Debt Solutions can help. The counselor will take you through a step-by-step process and show you how to calculate debt-to-income ratio, by simply dividing your total monthly debt obligations by your total gross monthly income. For example, if your monthly debt obligations are $1,000 and your total monthly income is $2,500, your debt- to-income ratio would be $1,000 ÷ $2,500 or .40. Most professionals say that a ratio high may require action, and credit counseling is a logical step.