Quick Tips On The Mortgage Loan To Value (LTV) Ratio

LOAN TO VALUE RATIO

At its most basic the loan to value ratio is the ratio of the amounts of loans you have on a property to the value of the property itself.

Here is a mortgage loan scenario:

you owe $80,000 on a first loan

you owe $10,000 on a second loan

the property is worth $100,000

the total loans on the property are $90,000

the loan to value ratio is 90% ($90,000 loans/$100,000 property worth)

Often times you will hear the combined loan to value (CLTV) ratio. This just means the combined first and second loans as a percentage of the property. The first and second loans are stated separately because often the interest rates on them are different. The rate of second mortgages is usually much higher.

The higher the loan to value ratio is the higher the loan's value is as a portion of the property value. As such, the higher the loan to value ratio is the lower the amount of equity there is in a property.

Lenders base their interest rates in part on risk. If a property has a lot of equity then a mortgage on that property is a lower risk for a lender. In the event of a mortgage default they can simply repossess the property. There is enough equity in the property that the lender can recoup their losses. For example, if a lender makes a loan for $250,000 on a property worth $500,000 then if they have to repossess it they will likely be able to sell the $500,000 property for at least the $250,000 that they need to recoup their loan.

The loan to value ratio is used by lenders to determine the interest rate, in conjunction with other factors such as credit, income, assets, etc.

It is important to understand that the loan to value ratio of a property can change over time even if the loan size remains the same. If the value of the property rises and the loan value remains the same, then the loan to value ratio will decline. Equity is increasing in the property because its value is going up.

Get Mortgage Rates, 25+ Free Mortgage Calculators, Mortgage Quick Tips and Much More Subscribe to our free Mortgage and Real Estate RSS Feed - Great Free Content For Your Website

Archer Pacific's website has vast mortgage resources.

There is a lot of useful content that can be used by other websites.

The 25+ Mortgage Calculators will help you figure out any mortgage scenario.

Get smart tips on saving on your refinance or real estate purchase.

Get fresh daily content to republish on your website through our free RSS feed.

There are guides to debt consolidation, bad credit issues, choosing a realtor, understanding minimum payment options, adjustable rate mortgages, 40 year loans, 50 year loans, and much more.

Email us your mortgage related questions for a quick answer.

Republish our mortgage calculators on your site for even better content.

Visit http://www.archerpacific.com

Mortgage Loan to Value Ratio: What You Need to Know
Your loan to value ratio is an important aspect of your mortgage. This ratio determines how much you can borrow when taking ...

The Advantages of No Ratio Mortgage Loans
LOAN RATIOSA mortgage loan is usually evaluated using a number of factors, including:the borrower's creditthe borrower's asse...

Mortgage Loan Loan to Value Ratio Explained
The loan to value ratio is an important aspect of your mortgage application. This ratio affects your approval status and the...

Mortgage Refinancing: Loan-to-Value Ratio Basics
If you are in the process of refinancing your mortgage it is important to understand how loan-to-value affects your mortgage ...

Mortgage Factors: Loan to Value
When applying for a home loan, there are a number of factors you have to take into account. Loan to value is one of the key i...

Understanding Loan to Value Calculations as Part of Your Mortgage
When most people think about mortgages, they focus on credit scores, points, term and interest rates. The loan to value ratio...

Mortgage Loan 101: Your Appraisal
If you are in the market for a mortgage, learning the basics will help you avoid making common mistakes that can cost you tho...

What Is A Quick Mortgage Loan Checklist?
Here are some loan related factors you may want to consider:consider how many different offers you want to get from different...

Mortgage Loans - LTV (Lending Risk Ratio)
When buying your home, it is imperative to have as much money as possible for your down payment. Not only should you save for...

Jumbo Mortgage Loans - Getting Approved for a Jumbo Mortgage Loan Online
Getting approved for a jumbo mortgage loan online is similar to getting approved for a traditional mortgage when you use a mo...

Mortgage Refinancing: How to Find the Best Mortgage Loan
Taking out a mortgage can be a stressful and time consuming process. There are a number of mistakes homeowners make that can...

Mortgage Loan Rejected How to Get Approved
People are denied mortgages for a variety of reasons. If your mortgage application is denied, it is a hard thing not to take...

Mortgage Loan Basics What You Need to know
If you are in the market for a new mortgage or refinancing your current mortgage, you need to do your homework and shop for t...

No Doc Mortgage Loans How This Mortgage Could Help You
If you are struggling to find a traditional mortgage loan because you cannot document enough of your income to qualify, you c...

Need a Real Estate Loan? Mortgage Credit Requirements Not the Same as Auto Financing
Qualifying for a real estate purchase requires different credit than auto financing or credit cards. In fact, you may be able...

"Points" in a Mortgage Loan
What are the "points" that are part of a mortgage loan transaction? A "point" is 1% of the size of the loan. Being charged "a...

4 Tips About Mortgage Loan Co-Borrowers
Different Kinds of Co-BorrowersCo-borrowers can be added onto a mortgage loan for a number of reasons.These include:income pu...

How Can I Compare Loan Terms With A Mortgage Calculator?
BasicsThe term of the loan is the number of years you have the loan.Most loans require you to pay the loan off over the lengt...

7 Quick Tips About Participants In Mortgage Loan Process
Mortgage Loan ParticipantsThere are several basic categories of people involved:-lender -broker/salesperson -appraiser -es...

Mortgage-Refinance Loan Measurment 101 — Evaluate Your Own Ability to Pay
We live in a society where people are losing their homes at an alarmingly high rate. There are several reasons for this, but ...