Loan to value

1) Loan-to-value ratio - Wikipedia
2) Loan-To-Value Ratio - LTV Ratio Definition | Investopedia
3) LTV - What is Loan-To-Value Ratio? | Zillow

loan to value

How To Use
The Loan-to-Value calculator is provided to help you estimate how much you owe on your mortgage compared to your home's current market value.

This calculator returns information based on inputs regarding your existing mortgage information. It is important that you provide accurate information in order to receive more realistic results.

Please Note:
These results have been calculated based on your inputs regarding your existing mortgage information. Your mortgage company may consider additional factors in determining your Loan-to-Value amount.

Loan to value ratio (LTV) is the relationship between a property value and the amount of loans against it. LTV is calculated by dividing the loan amount by the property value.

If a home buyer makes a down payment of $40,000 on a home appraised at $200,000, the mortgage loan would be for $160,000. The LTV would be calculated by dividing the loan amount ($160,000) by the appraised value ($200,000) multiplied by 100. That makes the LTV ratio 80 percent.  The bigger your down payment and the more home equity you have, the lower the LTV ratio.

LTV is one of the more important factors mortgage lenders consider when evaluating a home loan application. Loans with low LTVs are considered much safer than those with high LTVs. That’s because if the borrower defaults and the property must be foreclosed and sold to repay the loan, the lender has a much better chance of recouping what’s owed when the property is worth much more than the loan balance.

A Loan-To-Value Ratio, also referred to as LTV Ratio, is a comparison between the value of your loan and the value of your home. To determine your LTV, your lender will divide your loan amount by the lesser of the home’s appraised value or purchase price (if applicable).

Lenders will evaluate your loan-to-value ratio while they are underwriting your loan. In general, borrowers with lower LTV ratios will qualify for lower mortgage rates than borrowers with higher loan-to-value ratios. Borrowers who have a lower loan-to-value ratio are considered less risky to lenders because they have more equity in their homes. In the eyes of a lender, borrowers with a lower loan-to-value ratio, and thus more equity in their homes, are less likely to default on their mortgage, and even if they did default, the lender would have a better chance of selling the home in foreclosure for at least as much as they are owed for the mortgage.

Your loan-to-value ratio will also determine whether you have to pay private mortgage insurance . For conventional loans, borrowers who want to avoid paying private mortgage insurance will need to make a down payment of 20 percent of the value of the home. FHA purchase loans will allow you to have a loan-to-value ratio of up to 96.5 percent. USDA, VA and other specialty loan types may allow for a 100 percent LTV for a purchase loan.

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