| In many cases it is difficult to obtain financing with little | | | | second mortgage for the remaining 20% which would |
| or no down payment. The lender will usually look for | | | | equal $20,000. You are now in a situation where you |
| very high credit scores and a very thorough payment | | | | have a 100% financing situation but are not open to |
| history. In some cases it may be easier than one | | | | mortgage insurance. Generally the interest rate on a |
| would think. Twenty years ago it was always a rule of | | | | second mortgage is higher than the interest rate on |
| thumb that one needed to put down at least 20% in | | | | the first mortgage, but the difference is less expensive |
| order to purchase a home. Last year over 40% of | | | | than what the mortgage insurance would cost.Another |
| home purchases were made at 100% loan to | | | | way to finance a home with very little money down is |
| value.One reason that people avoid high loan-to-value | | | | to work the closing costs into the scenario. A lender |
| loans is the fact that a lender will require mortgage | | | | will generally allow a seller to pay a certain amount of |
| insurance if the loan-to-value ratio exceeds 80%. Loan | | | | the closing costs. This allows for a higher loan to value |
| to value is the ratio of the loan in comparison to the | | | | ratio.High-Loan-To-Value loans allow both home buyers |
| value of the home. For example:Home Value = | | | | and investors to keep cash on hand for home |
| $100,000 | | | | improvements or other investments and are a great |
| Loan Amount = $80,000 | | | | way to purchase a home without large amounts of |
| Loan-to-Value ratio = 80%In this example the loan to | | | | cash on hand.Copyright 2006 Jason P BertrandJason |
| value ratio is 80% because the loan amount is 80% of | | | | Bertrand is the President of JPB Financial Services, Inc., |
| the value of the home. Mortgage insurance is a policy | | | | a Connecticut Corporation and member of the Better |
| that protects the lender in the case of default by the | | | | Business Bureau. He has over a decade of |
| borrower.One way around mortgage insurance is to | | | | experience in the financial services industry and is a |
| take out what is called a piggy back loan. A piggy | | | | Notary Public in the State of Connecticut. Please visit |
| back loan is taking out a first mortgage for 80% of the | | | | the following sites: Feel free to contact Mr. |
| value, in the case of the example $80,000 and a | | | | |