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What Is Loan To Value (LTV) And How Does It Affect The Size Of My Loan?
While this video simplifies things to help you remember, the loan to value ratio is the amount of money you borrow compared with the price or appraised value of the home you are purchasing.
Each loan has a specific LTV limit. For example: With a 75% LTV loan on a home priced at $100,000 you could borrow up to $75,000 (75% of $100,000) and would have to pay $25000 as a down payment.
The LTV ratio reflects the amount of equity borrowers have in their homes. The higher the LTV the less cash homebuyers are required to pay out of their own funds.
So, to protect lenders against potential loss in case of default, higher LTV loans (80% or more) usually require mortgage insurance policies.
Can My Settlement Charges Change?
Yes, if circumstances change, such as:
- a natural disaster damages the property or affects closing costs
- the title insurer providing the estimate goes out of business during underwriting
- new information on you or the transaction affecting settlement is discovered.
If any of these events change 3rd-party charges beyond the 10% tolerance limit creditors may issue a revised Loan Estimate.
If a creditor issues a Loan Estimate they are presumed to have collected all 6 pieces of required information. They may not claim a change in circumstances by receiving one of these pieces of information AFTER issuing a Loan Estimate.
How Does Purchasing A Home Compare With Renting?
Like the guy in the video says, the two don’t really compare at all.
The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity take advantage of tax benefits and protect yourself against rent increases.Also, you may be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you are building equity increasing YOUR net worth.
Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities like insurance, real estate taxes, and upkeep which can be substantial. But given the freedom, stability, and security of owning your own home they are worth it.
How Is A Home Marketed?
As you’ll see in the video, every home and market is a unique situation. Good marketing plans are specific to both. But every plan will include: Preparation Pricing and Marketing Activities.
Preparation takes time – typically, months. Homes must be in “show” condition all repairs and upgrades complete and all photos and video completed before the home goes on the market.
Pricing, likewise, should be planned in advance. Your broker will advise on both the best price and the best TERMS things like closing costs and seller credits to balance sales speed with sales price. Once the home is on the market it will quickly be entered in the MLS and will show up in Internet searches by agents and buyers.
Your broker will advise other marketing activities including advertising, signage, showing and open house events so make the best of your situation. Their aim is to get negotiable offers, and then take the offer you accept through the closing process.
What Disclosures Are Used For Loans Not Covered By TRID?
Creditors must continue to use the Good Faith Estimate, Truth-In-Lending Disclosure and the HUD-1 form for reverse mortgages, HELOCs, mobile home or other non-attached dwelling loans and others NOT covered by TRID.
Housing assistance loans for low- and moderate-income consumers are partially exempt from TRID disclosures, and have specific rules.
Creditors are not required to provide Loan Estimate and Closing Disclosure forms and related booklets and statements for these loans.
What Types Of Closing Costs Are Associated With FHA-Insured Loans?
While this video simplifies things to help you remember, except for the addition of an FHA mortgage insurance premium, FHA closing costs are similar to those of a conventional loan.
As of 2013, the FHA requires a single, upfront mortgage insurance premium equal to 2.25% of the mortgage to be paid at closing (or 1.75% if you complete the HELP program).
This initial premium may be partially refunded if the loan is paid in full during the first seven years of the loan term.
After closing, you will then be responsible for an annual premium – paid monthly – if your mortgage is over 15 years or if you have a 15-year loan with an LTV greater than 90%.