Mortgage Factors Loan To Value

Mortgage Factors Loan To Value

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 issues that will determine whether you​ get that loan.
Mortgage Factors: Loan to​ Value
When considering an​ application for a​ mortgage,​ lenders look at​ a​ number of​ factors .​
Regardless of​ the​ type of​ loan,​ they always look at​ loan to​ value ratios .​
The loan to​ value ration is​ simply a​ calculation that tells the​ lender and you​ the​ value of​ the​ property in​ question versus the​ amount of​ the​ loan .​
The ratio is​ determined by dividing the​ appraised value of​ the​ home by the​ amount sought for the​ home loan .​
For instance,​ assume a​ home is​ appraised at​ $200,​000 .​
If you​ apply for a​ $160,​000 home loan,​ the​ loan to​ value is​ 80 percent.
In evaluating any loan of​ any type,​ lenders try to​ evaluate the​ risk factor .​
By risk,​ they are trying to​ ascertain the​ chance you​ will default on​ the​ loan and leave them holding the​ property .​
The loan to​ value ration is​ one of​ the​ factors used to​ determine risk .​
Simply put,​ the​ larger the​ loan to​ value ratio,​ the​ more risk the​ lender has of​ getting stuck with the​ property .​
The higher the​ risk level,​ the​ more picky the​ lender is​ going to​ be about other factors in​ the​ application process such as​ income,​ credit and so on​ .​
The magic number with loan to​ value rations is​ 80 percent .​
If you​ can come up with sufficient cash to​ put down 20 percent on​ a​ property,​ the​ lender will consider the​ loan to​ be less risky .​
Put in​ practical terms,​ the​ lender knows you​ aren’t about to​ walk away from your large cash down payment if​ you​ can help it .​
Thus,​ there is​ less risk in​ granting the​ loan.
If you​ are applying for a​ mortgage with a​ high loan to​ value ratio,​ you​ need to​ make sure you​ have excellent credit and a​ strong history of​ employment .​
An application with 90 or​ 100 percent loan to​ value is​ going to​ make a​ lender risk sensitive,​ so you​ can expect it​ to​ be much harder to​ get the​ loan .​
In the​ current home financing market,​ the​ loan to​ value ratio is​ not as​ critical as​ it​ used to​ be .​
There are now a​ bevy of​ lenders that specialize in​ particular types of​ loans,​ particularly high loan to​ value ratio mortgages .​
If you​ are looking at​ a​ high loan to​ value ratio,​ a​ mortgage broker is​ your best option to​ finding the​ best deal.

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