High Loan-To-Value or LTV Mortgages
A high loan to value, also called a high LTV loan is a loan where the amount of the mortgage is high in comparison to the value of the loan. Generally 80% loan to value is considered normal. 100% financing is rare in this current mortgage climate.
For example, a home with a value of $100,000 would be at an LTV of 80% if the loan amount were $80,000 and an LTV of 90% if the loan were $90,000.
In many cases it is difficult to obtain financing with zero money down. The lender will usually look for very high credit scores and a very thorough payment history for one hundred percent financing if it is available. In some cases it may be easier than one would think. Twenty years ago it was always a rule of thumb that one needed to put down at least 20% in order to purchase a home. Last year over 40% of home purchases were made at 100% loan to value.
One reason that people avoid high loan-to-value loans is the fact that a lender will require mortgage insurance if the loan-to-value ratio exceeds 80%. Loan to value is the ratio of the loan in comparison to the value of the home. For example:
Home Value = $100,000 Loan Amount = $80,000 Loan-to-Value ratio = 80%
In this example the loan to value ratio is 80% because the loan amount is 80% of the value of the home. Mortgage insurance is a policy that protects the lender in the case of default by the borrower.
Contact Us or call us at 877-538-7967 for the lowest current rates on High LTV Mortgages.
How to deal with Mortgage Insurance
One way around mortgage insurance is to take out what is called a piggy back loan. A piggy back loan is taking out a first mortgage for 80% of the value, in the case of the example $80,000 and a second mortgage for the remaining 20% which would equal $20,000. You are now in a situation where you have a 100% financing situation but are not open to mortgage insurance. Generally the interest rate on a second mortgage is higher than the interest rate on the first mortgage, but the difference is less expensive than what the mortgage insurance would cost.
Another way to finance a home with very little money down is to work the closing costs into the scenario. A lender will generally allow a seller to pay a certain amount of the closing costs. This allows for a higher loan to value ratio.
Miller Mortgage has experience with high loan to value loans in Massachusetts and Connecticut. It is always good to have a mortgage broker working with you that will help to make the buying process as smooth as possible. We look forward to serving you.
Once you're ready to speak with a Connecticut or Massachusetts mortgage company we’re here to help. We offer free pre-approvals and prompt service. All types of credit and income are welcome and there’s absolutely no cost or obligation.
Apply for a mortgage pre-approval now via our secure web application, Contact Us for the lowest current mortgage rates, or call us at 877-538-7967.
Miller Mortgage is a licensed mortgage broker in Massachusetts and Connecticut. Located just north of Boston in Peabody, MA our mission is to provide the best customer service and the lowest mortgage interest rates. Our volume enables us to provide the best mortgage rates and programs in the Mass and Connecticut markets.
When you call Miller Mortgage, you're speaking with local representative who knows the area - not an impersonal calling center. We serve all Connecticut and Massachusetts towns. As a local mortgage broker, we have expert knowledge of Massachusetts communities such as Worcester, Boston, Plymouth, Andover, Lowell, Newton, Peabody, Middleton, Danvers, and Quincy.
We're here to help build your financial freedom and to be an ongoing part of your financial future. As part of that goal, we offer free pre-approvals and prompt service. All types of credit and income are welcome and there's absolutely no cost or obligation. Apply for a mortgage pre-approval now via our secure web application, Contact Us for the lowest current mortgage rates, or call us at 877-538-7967.
Follow us on Twitter
Become a Fan on Facebook