LTV (Loan-to-Value)–Definition

Probably not a lot of you looking at a new house or re-financing right now but a key term you need to be aware of when shopping for a mortgage, or you may be hearing it on the news a lot lately.  The term LTV (Loan-To-Value), what this means is the total loan as a percentage of the value of the home.  I will give you an example, say a mortgage company won’t go any higher than a 90% LTV, the house is worth 100K, so they won’t loan anymore than 90K on a house that is worth 100K.  The LTV is a very important part of the terms of any mortgage.  Gone are the days of 100% LTV.  FHA is still offering 97% LTV but that is as high as you can go, so future mortgages are looking in the range of 90% to 95% for conventional loans, conventional loans are normal bank loans not associated with the government.  Before making a housing or re-fi decision, please feel free to contact me to bounce off the terms that you have been given on your GFE (Good Faith Estimate), this is where a mortgage broker will outline the terms of the mortgage and the closing costs associated with that mortgage.  It can save you thousands of dollars if you ask the right questions.  Does anyone have any other terms that they don’t understand regarding their mortgage?  Respond in the comments section and I can explain what the terms mean in a future post.

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~ by debt2dreams on November 19, 2008.

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