Why would a lender give a morgage of 110% value of the house?
2007-03-13 18:00:42 · 4 answers · asked by Over The Rainbow 5 in Business & Finance ➔ Renting & Real Estate
Lenders have 110% LTV loans so people can include closing costs. Depending on the value of the property, closing costs, including taxes and insurance, can exceed 10% of the sales price. A borrower usually must have impeccable credit to qualify for these types of loans.
2007-03-13 21:10:11 · answer #1 · answered by Anonymous · 1⤊ 0⤋
A single lender won't, Loans are based upon purchase price or appraisal value whichever is less. What occurs when borrowing beyond value is a blending of a first mortgage and a second line of credit. A sterling credit borrower can then go up to 125% maximum. It is still based upon the purchase price, or appraisal value, whichever is lower. The second will have a high interest rate as they are taking on the risk. Most will not be approved if the first is a adjustable rate or negative amortizing type loan. The first loan will usually only go 95% of market value because of the second.
2007-03-14 01:11:40 · answer #2 · answered by Myron 4 · 1⤊ 0⤋
Because you will be locked into them for a longer period of time as nobody else (or most) won't be able to refinance you once you do that.
2007-03-14 01:32:26 · answer #3 · answered by 1235 4 · 0⤊ 0⤋
to make more money from you!
if you do something like that, make sure you're gonna stay in the property for a while to make up for that negative equity you're starting off with!
i cringe when i hear this!!
2007-03-14 01:05:52 · answer #4 · answered by Art 4 · 0⤊ 0⤋