All You Need To Know About Loan to Value Ratio (LTV)
Loan to Value ratio is the amount of money you’re borrowing for your home as a percentage of your home’s value. Let’s say, you’re going to buy a house for $200,000 with a $40,000 or 20% down payment. if your house is valued at $200,000 or higher, your LTV IS 80%. That’s because you divide your loan amount by the purchase price, not the appraisal price unless the appraisal comes in low.
Let’s say your house gets appraised, for lower than your purchase price, say $160,000 That means your LTV is 100% because your loan amount of $160,000 is the same as the value. In the lending world, a lender will go off the lesser of the two, the sales price or the 3rd party appraised value! In the event the appraisal comes in low you will want to talk with your agent and possibly renegotiate with the seller or you, the buyer, can choose to make up the difference if you want or need to stay at the initial loan to value!
Loan To Value is a key factor in your ability to get a loan, the lower the LTV, the less risky the lender sees the loan… but there are several high LTV programs available such as USDA, VA, FHA, Conventional, and a few other options! Let talk about the best mortgage plan for you!
Chat with The Hunter Home Loan Team Today!
For more details on how to prepare and what to expect at your first meeting with a mortgage professional or if you are interested in getting started on your loan approval process, please contact our Hunter Home Loan Team at 727-315-1635.
Those who are feeling overwhelmed, or are Interested in learning more about loans we offer or loans approved with conditions Check out our resources here for agents or clients…We are here for YOU!