If you are a First Time Home Buyer, all the mortgage terms you are now newly being exposed to , can be a bit confusing. Loan-to-Value is a term used in the mortgage industry that reflects the amount of money youre borrowing as a percentage of the homes value you are purchasing. Mortgage Lenders use Loan-To-Value Ratios to make calculations for refinances and new purchases. The way this is calculated may be different, depending on purpose of your loan. With a Refinance, the Loan -To-Value is equal to your loan size divided by your homes appraised value. For a purchase, Loan-To-Value is based on the sales price of the home. If your home happens to appraise for less than its purchase price the Loan-To-Value is based on the lower purchase price not the appraised value. your Loan-To-Value is important because it determines both your mortgage rate and your loan eligibility. Below are three of my favorite LOAN PROGRAMS and the Loan-To-Value Ratios they allow. Up to 100% Loan-To-Value is allowed with a VA Loans. The U.S. Department of Veterans Affairs guarantees VA loans. Their guidelines allow for 100% Loan-To-Value, which in short means that this loan provides a no down payment option. VA mortgages are available to certain active-duty military service persons, veterans, military spouses, and members of the Selected Reserve, National Guard, cadets at the U.S. Military, Air Force or Coast Guard Academy members, midshipman at the U.S. Naval Academy, World War II merchant seamen, U.S. Public Health Service officers and National Oceanic & Atmospheric Administration officers. Up To 100% Loan-To-Value is allowed for USDA Loans. The U.S. Department of Agriculture insures USDA loans, and also like the VA provide a no down payment option. USDA loans are generally known as Rural Housing Loans but in addition to be available to rural parts of the country, they are also available to many suburban homeowners. Up to 96.5% Loan-To-Value is allowed for FHA Loans. The Federal Housing Administration insures FHA Loans, an provide a Min. down payment option of 3.5 percent. FHA loans are not limited by military background or location, and there are no special eligibility requirements, which makes this Loan a good option for First Time Home Buyers who have less-than-perfect credit scores.
Posted on: Fri, 14 Mar 2014 19:37:10 +0000
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