A gentleman has two mortgages on the same piece of property. The combined monthly payments are right around $2,400 and the combined balance on the mortgages is under $250,000. The property is worth well over $300,000.
One day our friend decides maybe he should refinance his house since interest rates are at a historic low. He calls up a company and gives them his information. The nice man on the phone informs the protagonist of our tale that his debt to income ratio is too high but that if he did qualify his payments would drop to $1,700 per month.
