If you are in the process of refinancing your home loan or applying for a new purchase home loan, you will probably encounter the term "Loan to Value," LTV. You may wonder how does LTV determine the size of my loan, and what are the consequences of having a high LTV? Simply stated, the LTV ratio is the amount of money you borrow compared with the price or appraised value of the home you are either purchasing or refinancing. For example, with a 95% LTV loan on a home priced at $400,000, you could borrow $380,000, and you would have to pay a $20,000 down payment, along with any points and loan fees required to obtain the loan. Lenders like to see LTV's at 80% or below... The lower the LTV, the more protection the lenders have against potential loss in case of a default on the loan. Be...
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