If you’re taking out a Colorado Hard Money Loan you’ll want to understand the LTV and what the percentage attached to your loan means. Here’s a quick rundown to get you in the know.
When you research Colorado Hard Money Loans you’re going to see numbers like 70% LTV and 80% LTV. What does this mean for you as a borrower?
If you’re investing in property the loan amount is going to be weighed against the purchase price and the value of the property. The LTV is the loan to value, meaning the amount of the loan divided by the assessed value of the property.
Another important term to know is ARV. This is the approximate retail value, the amount the lender estimates the property to be worth after it has been improved.
Understanding Your LTV Percentage
Now that you know the key terms you’re going to see lenders offer 70% LTV, 80% LTV, and some, like Level 4 Funding, offering 90% LTV Colorado Hard Money Loans. If you’re purchasing a $200,000 house and want a 90% LTV Colorado Hard Money Loan you’ll be asking to borrow $180,000.
Borrowing more can be riskier, but if you can’t put up more than 10% of the purchase price then a 90% Colorado Hard Money Loan may be the way to go!
How LTV Affects Your Loan
Another thing to consider is the higher the LTV, the higher the interest rates and points. These will vary from lender to lender, but the LTV and percentage rates will climb in tandem. If you can afford to use a lower LTV loan you’ll be paying less over the long run, saving yourself more money for investments.
Getting Your Loan Approved
Once you’ve picked a Colorado hard money lender you’ll have to explain how you’re going to put their money to work. A complete plan of how you’re going to pay the loan back will include your plans for improving the property in order to pay off the loan.
For more questions about calculating your LTV or to discuss being approved for a Colorado Hard Money Loan, call Level 4 Funding today!
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters and 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.