What does LTV mean and how does it affect my loan request?

LTV stands for loan to value, it is a ratio that is calculted by dividing the market value of the home by the amount of loan.  This ratio works for refinaning and purchases.  For example:  A borrower putting a $10,000.00 down payment on a new home is financing 90% of the value of the house or 90% LTV, a borrower who has a house worth $100,000.00 who wants to refinance their existing mortgage of $75,000.00 and get cash back of $5,000.00 will be requesting a loan with an LTV of 80%.  The maximum loan to value is the amount of financing a borrower is able to receive based on the borrower’s credit, income and debts.  The mortgage calculator automatically calculates the loan to value on each loan request.  Unfortunately the mortgage calculator can not conclude what the maximum loan to value will be based on the borrowers credit and other factors that determine the loan approval.  The mortgage affordability calculator is a good tool to estimate the loan amount but the final terms and conditions will have to be decided by the lender.

This entry was posted on Wednesday, December 10th, 2008 at 5:21 pm and is filed under Mortgage FAQs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.