Facts to Understand about 80 Ltv Hard Money Loans

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If we compare the value of the property with the amount of mortgage the number that we get is the loan-to-value ratio. It would be clearer if we cite an example. Like if you get an $80,000 mortgage for purchasing a $100,000 home then you get a loan where the loan-to-value ratio is 80%. There are lenders in California who make it possible to have 80 LTV hard money loans. So, it is prudent to contact them when you require such a loan, they will help you in all respect.

If we notice from the perspective of a lender, then a mortgage having a high loan-to-value ratio is riskier. For mortgages that have a loan-to-value ratio above 80%, there would be a requirement for mortgage insurance. In the mortgage biz, we call loan-to-value LTV in short.

How lenders use LTV

An LTV ratio is one of the factors to determine the eligibility for having a mortgage, a home equity loan, or a line of credit. However, LTV can play a considerable role to determine the rate of interest possible for a borrower to have. It is noticed that lenders make it possible to have mortgage and home-equity candidates with the least possible rate of interest if their LTV ratio is 80% or below.

Is it possible to have a mortgage with a higher LTV?

However, if you have a higher LTV ratio it does not mean that you cannot have approved a mortgage. The only difference that may arise is that the loan interest may rise as there is an increase in the LTV ratio. Let us make it clear with an example. If you as a borrower have an LTV ratio of 95% can have approval for a mortgage. However, if we compare their rate of interest rate with that of a borrower with an LTV ratio of 75% the rate will be higher.

What is PMI

If your LTV is more than 80% there might be a requirement to purchase private mortgage insurance. This can be 0.5% to 1% additional to the entire loan amount on an annual basis. A PMI with a 1% rate on a loan of $100,000 would be an additional $1,000 which one has to pay per year. One needs to pay the PMI until the LTV ratio is below 80%. The LTV ratio can decrease as you pay back your loan and as the value of your house enhances with time.

However, if we notice, then we will see that it is possible to have a greater chance of loan approval with a lower LTV and the borrower does not have to buy PMI. It is also that a lower LTV will make it possible to have the loan at a lower rate of interest.

Is it always necessary to buy PMI with a higher LTV

Generally, it is a rule for lenders that they urge borrowers to buy PMI when they have a higher LTV. However, exceptions can be made when the borrower has a high income, lower debt, or may be having a large investment portfolio.

If you desire to have 80 LTV hard money loans it is wise to contact All California Lending. Call them at 877 462 3422 to get started today.

Source from: https://allcalifornialending.wordpress.com/2023/03/03/facts-to-understand-about-80-ltv-hard-money-loans/

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