Determination of the maximum loan-to-value ratio’
The ratio of the maximum amount of the loan to value is the largest allowable ratio of loan Size dollar value of the property. The ratio of high loan to value, the greater the portion of the purchase price that was financed. Since the house is collateral for the loan, the loan-ratio is a measure of risk used by lenders. Various loan programs are considered different risk factors and, therefore, have different maximum loan amount to the value of real property.
Breaking down ‘the maximum amount of the loan to value ratio’
Some mortgage loan programs allow for a high maximum loan-to-value ratio, and is designed specifically for low to moderate income and first time home buyers. Many of these programs are sponsored by state and local governments, Federal housing Administration and the veterans administration. It is reasonable for the borrower to investigate these options before selecting any lender already high loan-to-value Program.
Mortgage loan, along with advance payment will be used to purchase the property. The property acts as collateral for the loan. If the buyer can no longer make payments on the loans, the lender takes possession of the property. The lender can sell the property and use the proceeds to regain the borrowed money. The lender establishes the maximum amount of loan and value of the property. If the loan is too much a part of the property value, the Bank will not be able to get your money back in the event the borrower defaults.