 |
|
|
- Banks and other lenders will extend you credit
based upon a percentage of the
estimated market value of your home.
- That percentage of market value minus the
amount you owe on your first mortgage (plus any 2nd
or 3rd mortgages that you may have) becomes the maximum
amount of credit that lenders will give you.
- For example:
Let's say that your home has an estimated
market value of $150,000. The amount that you
still owe on your first mortgage
and any other liens is $100,000. The maximum
amount you can borrow is calculated as follows:
| Estimated
Market Value: |
|
$150,000 |
$150,000 |
$150,000 |
| Percentage
LTV: |
|
80% |
90% |
100% |
| Percentage
of Market Value: |
|
$120,000 |
$135,000 |
$150,000 |
| Less
Mortgage Debt: |
|
$100,000 |
$100,000 |
$100,000 |
| Equals
Total Equity: |
|
$20,000 |
$35,000 |
$50,000 |
|
- Banks and other lenders generally charge
a higher rate of interest for higher percentages of
LTV. That is why you will find in the market
quoted rates of PRIME + 0% for LTV percentages of
80% or lower.
- To get the best rate,
request a lower amount to borrow to keep your loan
amount at 80%LTV or lower.
Notes: calculate
your own LTV borrowing amount
Notes: check
your credit report for debt balances
Notes: understanding
credit debt ratios
|
|
|
|
 |
|
