| Mortgage lenders look at both the borrower and the | | | | the final category bank's review before approving or |
| property before approving a home loan. This means | | | | declining a Mortgage. |
| both borrower and collateral) need (house meet | | | | For example, a borrower can have excellent credit |
| certain criteria. | | | | quality, be prepared to get put 50% down (low LTV), |
| The Main 3 Categories: | | | | and even rejected because of "substandard collateral." |
| First, the borrower's credit scores, income, job history | | | | This simply means that the land does not belong to the |
| must fit within the guidelines of the mortgage company. | | | | bank wants to lend on.- Equity texas |
| Most people already know, though on the importance | | | | Examples of substandard collateral: |
| of credit scores. | | | | 1) Non-Condominiums justifiable means: ie, it is less than |
| Secondly, the loan LTV. The banks are very sensitive | | | | 50% of owner-occupied units within the apartment |
| to the amount it) loan to value ratio (LTV oneproperty. | | | | complex. It is occupied mostly by renters. For example, |
| LTV means "Loan to Value." For example, 100% loans | | | | if the apartment has 100 units and only 20% |
| have a 100% LTV. The borrower is getting a loan for | | | | areCondominium is an unjustified condo, and therefore |
| 100% of the property's value. The higher the LTV the | | | | risky in the eyes of the bank. Some banks will not lend |
| higher the risk. Naturally, banks prefer low LTVs as | | | | on condos and unjustified at all, but most banks are |
| these loans usually mean lower risk. Low LTVs mean | | | | only limited loan to value (LTV). |
| lower rates, generally speaking. The lower the LTV the | | | | Let's say a borrower qualifies for a 95% loan or a loan |
| less risk of default. | | | | 80/15/5. However, with an unjustified dwelling they can |
| Finally, the property itself-or the underlining collateral-is | | | | receive only about 85-90%. |