95 LTV Home Equity Loans

Home owners have several choices when looking for additional financial revenues. One avenue that is quite popular is to use a home equity loan. These loans use a certain amount of your home’s equity in the form of a second mortgage. Anyone borrowing against their home equity must be familiar with the term “Loan to Value” or “LTV.” Defined by percentages, LTV signifies the amount of the first mortgage lien compared to the real property appraisal and value. LTV percentages are determined by taking the amount of your loan and dividing it by the home’s value. That number produces the LTV percentage. It also indicates how much equity you have in your home. The percentages of your LTV and equity will always equal 100%.

The LTV percentage is an important tool used by lenders to assess risk. With 95 LTV home equity loans, the loan to value percentage is 95%. An 80% LTV home equity loan indicates the loan to value percentage is 80% and so on. 95% home equity loans provide many benefits as they enable the borrower to take out up nearly the entire home’s value in a second mortgage.

Those considering 95 LTV home equity loans must keep in mind that these loans aren’t unsecured, but rather secured as your home is placed as collateral. Should you default on the loan, the lending institution may choose to foreclose on your property. It’s important to realize that most lenders prefer issuing the standard 80% LTV home equity loans rather than 95% as these involve less risk. During times of a declining market, you may need to perform more research in order to find a lender that specializes in 95% loans as these are often more difficult to come by. According to financial experts, 95% LTV home loans have three times a greater default risk than an 80% loan. Additionally, loans with LTVs of 80% or less often have lower rates associated with them then those that have LTVs of 80% and above, such as 95% LTV home loans. Borrowers approved for 100% LTV loans are those that that have impeccable credit and top the charts with their credit scores.

Anyone interested in securing a home equity loan must make certain they pay close attention to their credit score, report and history as those with poor or bad credit will find they only qualify for loans of 80% or below. In order to qualify for 95 LTV home equity loans, you must have excellent credit, and the ability to prove to the lender you can successfully repay the second mortgage. Those who are intent upon using these loans must take their time to find a mortgage broker, banker or lending institution that issues these loans at this rate.

Some prefer to use high LTV home equity loans for the purpose of debt consolidation. Those who are interested in using these loans for that purpose must ensure they are dealing with licensed and registered individuals and that they are following the rules as set forth by law. There are many scam artists that will try to take advantage of those during their time of trouble. If you have any questions regarding the legitimacy of a broker or lender then check with your state’s Department of Banking and Insurance or Finance regulator. You can also check the company’s history with the Better Business Bureau to determine whether or not the company has a history of complaints.

There are several things to keep in mind when applying for high LTV loans; the first is the interest rates and high monthly payments. Those who find the market continually declining may find themselves in the unfortunate situation of having negative equity loan to value. This means that you have no equity in the home and own more than the property is worth. Those in this situation find that they have extreme difficulty finding a lender. Speak to your lender about high LTV loans if you are interested in applying for 95 LTV home equity loans or higher.