Recurring Debt
Any payment used to service a debt obligation that occurs on a continuing basis. Recurring debt involves payments that cannot be easily canceled at the payer's request, including alimony or child support, and loan payments. Investopedia Says:
Certain bills, such subscriptions, do not count as recurring debts because these payments can be terminated.
An individual's recurring debt is a strong factor when deciding how much of a mortgage loan he or she may obtain. Used in the debt-to-income ratio, lenders compare a borrower's income to the current amount of debt service payments. The concept behind this practice is to determine whether enough income remains, after accounting for recurring debts, to satisfy a mortgage payment. Related Terms:
Alimony
Debt Service
Debt-To-Income Ratio - DTI
Five Cs Of Credit
Household Income
Mortgage
Total Debt Service Ratio - TDS |