![]() ![]() So if your mortgage rate is bumped a quarter percent higher for a loan-to-value ratio of 80%, that same pricing hit may be increased to a half percentage point if the LTV ratio is a higher 90%. Those with lower LTV ratios will enjoy the lowest interest rates available, while those with high LTVs will be subject to higher mortgage rates and/or closing costs.įor example, if you’re being “hit” by the lender for having a less-than-stellar credit score, that adjustment will grow larger as the loan-to-value ratio increases (higher LTV ratio = greater risk). Not only that, but banks and mortgage lenders also set up pricing adjustment tiers based solely on the LTV ratio. They’ve also got more options if they do struggle with payments, as they could just sell the property without taking a loss (or the bank losing money). Someone with more ownership is less likely to fall behind on payments or foreclose, seeing that they have a greater equity stake, aka financial interest to keep paying the mortgage each month. It means the bank is risking less since you are more invested in the underlying propertyĮssentially, the lower the loan-to-value ratio, the better, as it means you have more ownership (home equity) in the property.A low LTV equates to a lower mortgage rate because you’re viewed as less risky. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |