When you are shopping for a mortgage you may become overwhelmed by foreign terms. Even though your lender and real estate agent will help you understand any unfamiliar financial terms, it’s nice to have a good understanding of the more important ones. This way you won’t need a translator when you hear financial jargon. If you already are familiar with these terms, it doesn’t hurt to have a better understanding of them. To get more information and advice on mortgages, contact the mortgage experts at Mortgage Investors Group today.
The importance loan-to-value ratio
The LTV (loan-to-value) ratio is calculated by dividing the appraised value of the home by the amount of the loan. This figure will be assessed during the underwriting process. As a general rule, borrowers who have lower LTV ratios pose less of a risk to the borrower, since they have more equity in their properties. Statistically, borrowers with lower LTV’s default less often, and when they do default, their properties are easier for lenders to sell. For these reasons, your LTV is an important factor in determining how much you can borrow.
Private mortgage insurance and LTV
Home owners are required to pay Private Mortgage Insurance (PMI) if their LTV is above a certain amount. Borrowers who do not want to pay PMI will have to put at least 20% down on a home. FHA mortgage loans allow borrowers to have a 96.5% LTV, while the USDA and VA have loan programs allow up to 100% LTV for a home loan.
Mortgage refinancing options
When a borrowers LTV is too high they are considered to be “upside down” on their home loan. This means the appraised value of their home is less than they owe on the mortgage. There are many special refinancing programs available for homeowners who are upside down on their mortgages. The most popular refinance option is the Home Affordable Refinance Program, known as HARP. Learn more about the HARP program, and other refinancing options such as the FHA Streamline Program by visiting the mortgage professionals at MIG. To learn more about your refinancing options, contact an expert at Mortgage Investors Group today.
High LTV mortgages
Having a low LTV is definitely a key factor in obtaining a mortgage. Although lenders want to see low LTVs, there are mortgage loan programs for borrowers with high LTVs and even some that do not take LTV into account. Following are some loan programs for borrowers with a low LTV ratio who want to obtain a new mortgage, or refinance their existing mortgage: VA Loans – allow 100% LT, USDA Loans – allow 100% LTV, FHA Loans – allow 96.5% LTV.
Visit Mortgage Investors Group to get the latest quotes on loans for borrowers with high LTV ratios.
