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May 25 2022

Guidelines and the LTV Broker Advantage

Last episode, I mentioned how banks are conservative, and brokers have much more flexibility. I spoke with my friend John Lemay about this and he had some good questions, so I invited him on to the show so we could talk about the answers together. We had a great chat that lasted 28 minutes, so I broke our time apart into different segments.

All loans have Guidelines, no matter who you borrow from. Borrowers must meet all loan guidelines if they want to secure a loan. Each lender or bank loaning out the funds may loosen their guidelines for a particular loan product if they so choose. To keep things simple, I’m only going to use the term “Guideline” because there are overlays with each lender that fluctuate  but also must be met to obtain financing. In this episode, I broke apart the importance of Loan-To-Value (LTV). Let’s jump in!

Flexible LTV & Conforming Loan Limit Guidelines in Colorado

One of the key points to obtaining financing is the Down Payment. The Down Payment ratio coincides directly with the LTV ratio. For example: A $100,000 home purchased with a 20% down payment results in an $80,000 loan which equates to an 80% LOAN ratioed to the VALUE of the Home (LTV). Any lender or bank can put forth any down payment guideline that they choose, but if the loan amount exceeds the Conforming Loan Limits, then Fannie Mae or Freddie Mac will buy that conventional loan since it exceeds the conforming amount. A loan that exceeds the conforming amount is called a Jumbo Loan.

Banks may offer Jumbo loans, but as a conservative lender, they may lower the LTV of that loan product to diminish the risk of their investment (into your home.) Since a Mortgage Broker has other lenders and Non-Qualified mortgage options, they may have access to a conventional loan that limits the loan amount to 90% LTV on a Jumbo Loan whereas a Bank may only allow a max LTV of 85%.

Flexible Home Mortgage Solutions in Colorado

When borrowers want to buy a home, but don’t have enough funds for a large down payment, this becomes a great scenario to contact a mortgage broker. Having the freedom to work with any lenders opens up the possibility to find one that allows higher LTV ratios, which directly lowers the amount of mandatory down payment.

Home Loans, Construction Loans, Refinance in Colorado

Remember that every situation has a Juicy Solution waiting for you. Take a look around the website for more information in the Blogs or the Resources Tab to learn what goes into obtaining a home mortgage whether building, buying, or refinancing.


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