The way to decide on banks and mortgage lenders, whether they make loans to certain buildings with a particular value, is really not a mysterious process, even if you do not hear much from them, while you are waiting for assessment and for a loan commitment. It can be a long wait, boring!
Mortgage lenders to determine a specific pattern, either in person for a mortgage that is qualified to do anything with the relationship between debt and income. But the other part of theirDetermination with different criteria, so much for the estimated value of the house, is not about you at all.
Loan-to-Value Ratio
If you want the mathematical equation of a loan-to-value ratio, simply divide the amount of the loan to the estimated value of a house and look at the percentage of results that the way of a loan to value ratio is expressed expressed as a percentage. Normally, the value of the loan will be lower than the value of the house, so that thePercentage below 100%. Lenders are more likely to approve loans with lower rates because their risk factor is lower.
It is not a loan-to-benefit does not exceed 100% impossible, but it is extremely risky. This means that the loan is higher than the market value of the house, making it very difficult to sell without additional funds to pay the mortgage at closing. While creditors are in business to make loans toMoney, are always anxious to avoid their own interests in the transaction and risks. Our current mortgage crisis was caused by too many lenders to grant loans with high loan-to-value ratio.
The interest rate a borrower must pay will be over the entire duration of the loan, the loan-to-value ratio influences. It is determined by the evaluation of the provider of risk and potential loss in case of foreclosure. And the borrower is required to be pay for private mortgage insurance, which only the lender if the borrower stops making payments.
It 'important to know that every loan-to-value ratio of 80% means that the loan as a "portfolio" loans are held by the provider must, because it is not for sale on the secondary market for loans and receivables to large financial institutions such as lenders usually their profits in a short period of time.
I hope this information on "what is theLoan> to value ratio "helps everyone.
Buying a house: What is the loan-to-value ratio?
