Everyone, including governments, can borrow money. Earlier this month (August 2nd 2011) the U.S government was deadlocked in a debate as to whether they should increase their debt ceiling. What exactly is the debt ceiling you may ask? The debt ceiling is the legal limit on the amount of money the US government can borrow to pay its bills, which includes the salaries of federal employees, federal programs such as Social Security and Medicare (a health insurance program for the elderly), and principal and interest payments to bondholders. The current limit is $14.3tn. (Yes tn = trillions)
That isn’t all too different than the debt to service ratios lenders use to calculate how much mortgage money a potential borrower can borrow. The Total Debt to Service Ratio (TDSR) considers all of a borrower’s monthly income versus their monthly expenses including credit card & line of cred obligations, mortgage payments, property tax payments, condo fees (where applicable) & heat bills.
Would you like to know what your “debt ceiling” is? Get in touch with me and I’d be happy to review your maximum mortgage qualification number for free with absolutely no obligations or pressure.
August 15, 2011