Dumb question about LTV! - Posted by Michel

import · February 21, 2001, 3:40pm

Posted by Michel on February 22, 2001 at 05:14:04:

Thanks Mark!

import · February 21, 2001, 3:40pm

Posted by Michel on February 21, 2001 at 16:40:25:

Please, explain. I know it means Loan To Value. If the sale price of a house is $100,000 but the house is appraised at, let’s say for example $150,000, what would be the 80%LTV?

Excuse my ignorance!

Thanks!

import · February 22, 2001, 7:54pm

Re: Dumb question about LTV! - Posted by D-Weezie

Posted by D-Weezie on February 22, 2001 at 20:54:57:

That is not a dumb question. It really depends on your situation. Due to the fact that if you are able to get Conforming financing(Prime) that 80% will be $120,000. However, if you must look to non-conforming financing (sub-prime) they will take 80% of the appraised value or sales price( negotiated price) whichever is less. SO if the home is worth $150.000 and the sales price is $100,000,and you can get 80 LTV then you will only qualify for $80,000. SO be careful when looking for financing and structuring the deal.

import · February 21, 2001, 6:25pm

Re: Dumb question about LTV! - Posted by Mark Graham

Posted by Mark Graham on February 21, 2001 at 19:25:07:

Value is usually determined by the bank’s appraiser. This can be misleading, though, in that the bank often sends the appraiser with a “target” value that satisfies the loan requirements. Sometimes the appraiser can get sloppy if the target value is easily met. Suppose that you wanted a $50,000 loan (first mortgage) on a $100,000 house, and that the policy of the bank bank was 20% equity or better. The banker might hire an appraiser to answer the question “Is this house worth $62,500?”. The appraiser might answer “Yes.” or something like “It’s worth at least $90,000.”

The short answer to your question is “$120,000”.