Understanding LTV and how much you can offer for a home (mortgage broker, credit score)

[WTBWestside]

I'm trying to understand how the differences in LTV would affect how much you can bidw for a home.

Let's say there are two loan pre-approvals:

• $625,000.00 ( LTV 80%).
• $625,000.00 ( LTV 75%).

How much can you afford to make an offer on based given the two different LTVs?

[ProjectMersh]

Not sure I am following you and perhaps you already know this but.......

Your downpayment is impacted:

-Required downpayment (equity): $125,000 (80% LTV)
-Required downpayment (equity): $156,250 (75% LTV)

The other question to ask is how much would your interest rate be in each scenario. That will impact your monthly payment. I will let the mortgage brokers say what (if any) impact that kind of difference would have.

[thelopez2]

That is an odd pre-approval. If you don't understand the pre-approval, you should find a new lender.
It probably means the loan is 625k and you need to put 156k down, or 208k down. Without credit score, rate and payment difference can't really be discussed. Where did you get that pre approval from?

[WTBWestside]

Originally Posted by ProjectMersh

Not sure I am following you and perhaps you already know this but.......

Your downpayment is impacted:

-Required downpayment (equity): $125,000 (80% LTV)
-Required downpayment (equity): $156,250 (75% LTV)

The other question to ask is how much would your interest rate be in each scenario. That will impact your monthly payment. I will let the mortgage brokers say what (if any) impact that kind of difference would have.

I do know this. I'm not talking about monthly interest. I'm talking about maximum I'm allowed to bid to the seller. Does the seller care if I bid over the amount pre-approved for or is it strictly only for the amount preapproved?

So in other words, at 75% LTV, would the maximum I would be able to bid on a property strictly: $156,250 + 625,000 = $781,250

Or can I bid over this amount?

[Ingenere]

I'm assuming they mean a loan of 625,000 as that is the cut off for conventional loans in los angeles.

Basically they are saying that they will lend you that amount as long as the loan is less than or equal to 80% of the appraised value of the property.

[WTBWestside]

Originally Posted by Ingenere

I'm assuming they mean a loan of 625,000 as that is the cut off for conventional loans in los angeles.

Basically they are saying that they will lend you that amount as long as the loan is less than or equal to 80% of the appraised value of the property.

YES. Anything more than that amount, I'd be going into a jumbo loan situation.

[Joe Van Fossen]

Originally Posted by WTBWestside

I do know this. I'm not talking about monthly interest. I'm talking about maximum I'm allowed to bid to the seller. Does the seller care if I bid over the amount pre-approved for or is it strictly only for the amount preapproved?

So in other words, at 75% LTV, would the maximum I would be able to bid on a property strictly: $156,250 + 625,000 = $781,250

Or can I bid over this amount?

If you have proof of funds that could cover the amount, I don't see why not. Technically, you're allowed to bid whatever you want to the seller -- having the backup (pre-approval, proof of funds) is what will allow them to take you seriously.

[WTBWestside]

Originally Posted by Joe Van Fossen

If you have proof of funds that could cover the amount, I don't see why not. Technically, you're allowed to bid whatever you want to the seller -- having the backup (pre-approval, proof of funds) is what will allow them to take you seriously.

OK thanks. That's all I needed to know as we'd like to bid over this amount if we need to.