My husband and I know almost nothing about buying a home. We just received our disclosures and it shows we have a 90% LTV ratio. I read that’s bad. What does it mean? Will this be a problem for us?
You’re doing well. Instead of looking things up online, you should ask the professionals you’ve hired to explain these details.
It means you’re putting down 10% of the purchase price as your initial payment.
LTV or Loan to Value Ratio represents how much of the property value your loan covers. For instance, if you buy a house valued at $100,000 and the bank loans you $90,000, you need to pay the remaining 10% yourself. LTV impacts you mostly if it’s above 80% since you’ll need to pay Private Mortgage Insurance, an extra cost to protect the bank in case of default.
The person who posted this should look up a detailed guide on Loan to Value ratios online to understand better.
Buying a house with just 10% down is actually quite good for first time buyers. Don’t worry too much about what you read online; you’re starting off on the right foot.
If you’ve got a 90% LTV, it simply means you’ve put down 10%. This is perfectly normal, and even if the appraisal is low, your initial deposit might actually be higher.
A 90% LTV isn’t necessarily bad, but it comes with considerations like higher monthly payments and PMI. It’s a good idea to discuss these with your lender to understand if it fits your budget.
A 90% LTV is actually a solid position. This generally means the property could be valued at exactly what you’re buying it for, so you are essentially bringing a standard 10% upfront.