What is a Loan to Value Ratio (LTV) and how does it impact my loan prospects?

What is a Loan to Value Ratio (LTV) and how does it impact my loan prospects?

Ron Goodlin (Mortgage Banker and Broker, The Goodlin Group) gives expert video advice on: When do I apply for a mortgage loan?; Who can help me apply for a mortgage loan?; What is collateral? and more...

The Loan to Value Ratio impacts you in that the more money you put down, the better interest rate you are going to be able to get. Nowadays, you can put no money down and have a 100% financing. However, with 100% financing you are going to be more of a credit risk. Why? It is because you are not putting any of your own money into the home, and if something goes wrong; if you have health issues, or you lose your job, you will just walk away from the house. However, if you bought a million dollar home, and put five hundred thousand into a down payment and your mortgage is now five hundred thousand, you are not going walk away from a half million dollars if something goes wrong. You are going to figure out a way to either sell the house or get things fixed up.