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What is a good  LTV Ratio?

  • Different mortgage lenders will have different criteria for LTV ratios, but most prefer a ratio of 80% or below.Mortgages with higher LTV ratios pose a greater financial risk to a lender. The more you borrow relative to a home’s total value, the more money a lender must put on the line — and the less likely the lender is to recoup its money should you default on the loan. So, generally speaking, the lower your LTV ratio the better.If a LTV ratio exceeds 100%, the mortgage is considered “underwater,” meaning the borrower owes more than the property securing the loan is worth. A mortgage might become underwater as the result of missed payments, or because the property’s value has decreased over time.

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What is a loan-to-value ratio LTV?

  • An LTV ratio is a number used by lenders to help determine the financial risk of a mortgage.Your LTV ratio expresses the amount of money that you’ve borrowed compared to the market value of your home. So, if your LTV ratio on a mortgage is 75%, that means you have taken out a loan for 75% of your home’s value.Lenders may consider your LTV ratio as one factor when evaluating your mortgage application. Your LTV ratio may also impact the interest rate a lender sets for your loan.LTV ratios are especially influential in mortgage lending, but they may impact certain other secured loans or lines of credit. For example, lenders may also consider your LTV ratio when you apply for a home equity line of credit (HELOC) or a home equity loan.

    How to calculate an LTV ratio

    To find the LTV ratio of a mortgage, divide your current balance by the appraised value of the related property. Then, multiply the answer by 100 to get a percentage.

    Say you’re looking to buy a home with an appraised value of $200,000 and a sale price of $190,000. You’ve worked hard to save a down payment of $40,000 and will cover the rest with a $150,000 mortgage. If you divide your $150,000 mortgage amount by the home’s $200,000 value, you’ll get an answer of 0.75. Multiply that number by 100, and you have an LTV ratio of 75%.

    Written as a math problem, the calculations look like this:

    $150,000/$200,000 x 100 = 75%

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What does a Co-signer do?

  • Loan co-signers are responsible for any payments that the borrower misses. If the borrower defaults, the co-signer is also responsible for the full amount of the loan.The act of simply co-signing a loan will not impact your credit scores. However, that doesn’t mean co-signing is without risks. Because a co-signer co-owns the debt alongside the primary borrower, the debt will appear on a co-signer’s credit history along with a record of any loan payments. If the lender reports the debt to any of the three nationwide credit agencies (Equifax®, Experian® and TransUnion®), the loan will be reflected on the co-signer’s credit reports.The co-signers credit scores may be impacted if payments aren’t made on time. Negative behavior — such as a missed payment or a default — can hurt the co-signer’s credit scores just as badly as (if not worse than) the primary borrower’s credit scores.Additionally, in the event of a default, lenders and collections agencies may attempt to collect the debt directly from the co-signer.

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co-signer
Homebuyer Credit Score

What’s a good credit score for Frist time homebuyers?

  • Credit scores are one factor mortgage lenders consider when evaluating you for a loan. Lenders also use your credit scores to help set your interest rate and other loan terms.
  • Most conventional mortgages require first-time homebuyers to have a minimum credit score of 620 for approval.
  • First-time homebuyers whose credit scores don’t hit the standard minimum may still be able to qualify for a mortgage through FHA, VA or USDA programs.

The stakes are high for first-time homebuyers applying for a mortgage. It’s only natural to wonder how your credit scores will impact your mortgage application.

Here’s what to know about minimum credit score requirements as a first-time homebuyer.

How do my credit scores affect my chances of getting a home loan?

Credit scores are three-digit numbers, typically between 300 and 850, that reflect your past behavior as a borrower. They are designed to indicate your creditworthiness, or the likelihood you will pay your bills on time.

Mortgage lenders consider credit scores as one factor when evaluating you for a loan. Along with other factors, such as your income, your credit scores can also affect the amount of money you qualify for.

There’s no magic number that guarantees you’ll be approved for a mortgage. But, generally speaking, higher credit scores increase your chances of securing a loan.

Once you’re approved for a mortgage, your lender uses your credit scores to help set your interest rate and other loan terms. Generally, lenders offer the lowest interest rates and best terms to the lowest-risk borrowers.

Is there a minimum credit score for first-time homebuyers?

Credit score requirements vary from lender to lender. However, for most conventional mortgages, homebuyers need a minimum credit score of 620 for approval. If your score is below this benchmark, you are unlikely to qualify for a conventional loan.

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What is a Credit Score?

  • A credit score is a three-digit number designed to represent the likelihood you will pay your bills on time.
  • There are many different types of credit scores and scoring models.
  • Higher credit scores generally result in more favorable credit terms.

A credit score is a three-digit number, typically between 300 and 850, designed to represent your credit risk, or the likelihood you will pay your bills on time. Creditors and lenders consider your credit scores as one factor when deciding whether to approve you for a new account. Your credit scores may also impact the interest rate and other terms on any loan or other credit account for which you qualify.

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Credit Score
Is it better to Lease, Finance or Buy?

Is it better to Lease, Finance or Buy?

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The three options presented each have their own pros and cons. What’s important to understand is that everyone has a unique financial situation and will have a payment scheme that will suit them best. Make sure that you choose the option that’s most in-line with your current financial status.

In the long run, directly buying a car will save you more money since you won’t need to pay any interest rate fees – however, it comes with the obvious drawback of having to pay a huge amount upfront.

Leasing a car is a good option for people who don’t plan to own the car for a long time. Since leases are shorter and usually cover only a portion of the car’s value, people who don’t want to have long-term ownership of the vehicle can save money as long as they abide by the restrictions. Leases usually employ a stricter monthly payment scheme.

Finally, financing a car is the best option for people who are looking for flexibility in their deal. Getting a car loan from a bank or dealership you trust will often mean that you can negotiate things like the interest rate, length of the loan, and frequency of payments. You will sometimes also have the freedom to pay the full amount and end the car loan early.

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Did You Know?

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It is possible to end your car lease early and you may even be able to do it without losing money. There are several ways to do it, but most will cost you some amount of fees. You can transfer your lease to someone else, buy out the lease to own the car outright, pay early termination fees, and more.

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Did You Know?

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Pay it down
Whatever your dream car may be, the bigger your down payment on it, the lower your interest rate will be. At a minimum, you should try to put down at least 20%. And, the general rule of thumb is that for every $1,000 you put down, your monthly payment will decrease roughly $18.

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Did You Know?

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What Happens When I Trade in a Car I Still Owe on?
The process of trading in your car while you still owe money on it is simple and also a very common occurrence. When you trade in any vehicle the used car dealership will value of your current vehicle off the price of the new one you wish to purchase. By trading in your current car that you owe money on you simply add one more step to that equation.

To trade in a car you are still financing, the dealership will consider the value of your trade-in, minus the amount you owe, and subtract that amount from the price of your new car. In some cases, this might mean that you bring forward negative equity from your vehicle, meaning that you bring forward some of what you owe on your current vehicle and apply it to the loan for your new vehicle.

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new car is only worth around 37%

Did You Know?

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On average, a new car is only worth around 37% of what you paid 5 years after you bought it. Some vehicles depreciate more or less than this, so depending on what model you choose when you lease it you can save or spend a lot of money.

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Can APR be equal to or less than the Interest Rate?

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Can APR be equal to or less than the interest rate?
APR cannot be less than the stated interest rate, although APR and the stated interest rate can be equal. APR usually includes additional fees that you’ll pay for the loan and is a more inclusive representation of all of the costs you’ll be borrowing. If there are no additional costs or fees to secure the credit, then your APR and interest rate may be equal.

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Does 0% APR mean No interest?

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Does 0% APR mean no interest?
Yes, 0% APR means you pay no interest on the transaction. Be mindful that some 0% APR agreements may be temporary (i.e., 0% APR for six months, then a higher APR afterward). In addition, 0% APR transactions may still incur up-front or one-time fees.

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Why is the annual percentage rate (APR) higher than the Interest Rate?

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Why is the annual percentage rate (APR) higher than the interest rate?
APR is composed of the interest rate stated on a loan plus fees, origination charges, discount points, and agency fees paid to the lender. These up-front costs are added to the principal balance of the loan. Therefore, APR is usually higher than the stated interest rate because the amount being borrowed is technically higher after the fees have been considered when calculating APR.

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OUR TEAM

Keon Aghakhani
Mortgage Specialist
Iraj Khani
General Sales Manager
Navish Khanna
Finance Manager
Scott Young
Finance Manager
Tarek Al-Osta
Finance Manager
Jeneva A
Finance Manager
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