If you're looking to take out a mortgage, a home equity loan, or home equity line of credit, you've probably heard a lot of terms being thrown around, including loan-to-value ratio. While this term may sound complex, it really couldn't be more simple. That's why we've taken it upon ourselves to explain the meaning once and for all. Keep reading to learn what a loan-to-value ratio is, how it works, and how you can use yours to your advantage. What is a loan-to-value ratio? A loan-to-value ratio is the measure of the size of any loans you've taken out on your home in comparison to the current value of your home. For example, if your home is worth $200,000 and you have $100,000 left to pay on your mortgage and you want to take out a $50,000 home equity loan on the property, your loan-to-value equation would look a little something like this: ($100,000 + $50,000)/$200,000 = 0.75 or $150,000/200,000 =0.75 In this case, you would have a 75% loan-to-value ratio...
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