How LTV and CLTV Will Affect Your New Home Loanby Kelly Richardson
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LTV, or Loan-To-Value, and CLTV, Combined Loan-To-Value, are two ratios that are commonly considered when measuring the credit risk of a potential borrower. Here's a quick rundown of how LTV and CLTV will affect your mortgage terms as you apply for a new home loan.
The Loan-To-Value Risk Factor for Home Loans
If the property has more than one mortgage, then the CLTV ratio is applied. This ratio takes into account the total of all liens on a property when computing the ratio. Basically, your mortgage lender will add up all liens on the property before dividing by the purchase price.
Combined Loan-To-Value: The Big Picture
Understanding this simple figure will help you make an informed decision on a new home loan. Ask your potential mortgage lender to explain every aspect of your LTV or CLTV during the pre-qualification process.
U.S. Department of Housing and Urban Development
About the Author
Kelly Richardson covers the local education and technology scenes in major cities across the country. His articles appear in educational journals, periodicals, and e-zines.
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