Can my DTI be improved by repaying my Buy now, Pay Later loans?
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While purchasing a home, my debt-to-income ratio is a big concern. With $100 i m paying for my college loans, car payments, and my small credit card bills. From some firms (Affirm, Afterpay), I have many $200 monthly(Buy now, Pay Later) loans.
I want to apply for a mortgage, but if I pay off my Buy Now, Pay Later loan, will it boost my DTI? I already saved some money, so it will not affect my credit scores or emergency funds. -
Your DTI ratio will be improved after you paying off your BNPL loans. BNPL (Buy Now, Pay Later) increases your monthly debts, and lenders treats these installment payments as a debt. So by paying off, your total monthly loan payments will be decreased. If your DTI ratio is low, then the financial institutes, thinks that you make more money than you own, which makes you a dependable borrower.