Definition of Financial Acronym LTV

LTV in financial terms is an acronym for “Loan To Value”. In basic this means the ratio between the appraised value of a property and how much the lender needs to borrow to buy it.

An example would be:

Home buyer needs a $250,000 loan on a home that is worth $270,000 dollars. Divide $250,000 by $270,000 [250000/270000] and you get 0.9259 which would be rounded up to .926 and then to .93 – so the LTV (or Loan To Value) is 93%

There are some banks that provide 100% LTV loans but they’re far and few between these days. Still, borrowers look for 100% LTV loans all the time in hopes of getting approved for a high risk mortgage.

The highest LTV you can get these days seems to be around 90% depending your credit rating and the bank’s, or private lender’s, risk assessment.

Many disagree with this statement but I have rarely seen the good old 100% LTV HELOC approved in the last year and a half – I have yet to see a 90 percent LTV HELOC approved either.

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Definition of Personal Inflation Rate

Personal Inflation Rate (PIR) is calculated by lending institutions (banks) to assess a borrower’s risk level for loan default and payment delinquency.

The lender looks at the borrower’s (maybe YOU) financial situation currently as far as financial responsibilities and overhead for living and compares that with your near-future financial situation and monthly payments. The example we use at CLF is a young family with a couple of children and a child on the way, and/or perhaps a child going to college. The bank simply wants to see if you are expecting to making more payments on a monthly basis in the future.

So now you know – when the bank even utter’s anything about your personal inflation rate, you’ll know they are sizing up your personal finances, and is doing a risk analysis on you as a possible borrower. It’s all good and normal.

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The definition of a loan modification

A loan modification is defined as “the modification of an existing loan agreement between a borrower and a lender, whereby the lender agrees to either; lower the payment amounts by spreading the loan over a longer term, lowering the APR (annual percentage rate – interest), combining the loan with other loans in a debt consolidation loan. Sometimes all three of these modification scenarios are made on the note(s).

Loan modifications are generally carried out with borrowers who have mortgages that they are defaulting on, or will soon be defaulting on. However, mortgages is not the only loan product that can be modified. Many borrowers do not understand that loan modifications can be applied to any type of loan

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