Examining the Loan-to-Value Ratio
Your equity facets prominently into what’s referred to as loan-to-value ratio, or LTV. The loan-to-value ratio is determined by dividing your present loan balance by the appraised value of the house. Therefore, you will divide $160,000 into the appraised value of the property вЂ“ $250,000 вЂ“ to get a loan-to-value ratio of 0.64 if you have $90,000 of equity and your remaining loan balance is $160,000.
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