Our underwriters use two calculations to determine each applicant’s qualifications: the mortgage-to-income ratio (aka housing expense ratio) and the debt-to-income ratio (aka front-end ratio). These are known as qualifying ratios because they tell a useful story about an applicant’s finances and whether they qualify for a mortgage. The mortgage-to-income ratio compares the applicant’s monthly income to the amount of monthly payments they’d make for a mortgage, which helps lenders understand what loan amount would be realistic for repayment. The debt-to-income ratio helps lenders understand how much debt the applicant already carries, which could impact their ability to repay a mortgage if the ratio is too high.

When you refinance, you essentially swap one mortgage for another. Refinancing gives homeowners the opportunity to get a better deal on their mortgage than they got when they first bought their home, either because economic conditions are better (lower interest) or because they are in a better financial place and want to get rid of monthly private mortgage insurance payments. There are other potential benefits to refinancing, like access to your home’s equity , though this depends on your situation and the type of refinance you go for.

When you hear your real estate agent or lender talk about the local housing market, they may use the term “seller’s market” to describe conditions that aren’t necessarily as favorable for buyers. In a seller’s market, competition is higher for buyers, meaning they won’t have as much leverage to negotiate. The seller will be able to set a higher asking price and can reasonably expect to get offers that meet or exceed that price. There are a few different causes for a seller’s market, including a lack of available houses and highly favorable economic conditions that make it easy for people to buy houses. By contrast, a buyer’s market favors the people buying rather than selling.

The title of a property is the official legal record of who owns a property. The title is different from a deed in that titles are public record, whereas a deed is a document for an individual who owns something.