LTV (loan to value)

nntong2007
Contributions:14

i am going to apply a loan. i put down 20% to maintain ltv of 80% to avoid paying pmi. if next year or 2 year later, my home value is going down, so do i have to put some more money down to maintain ltv of 80% to avoid paying pmi?

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February 13 - US

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Answers (6)

John Misina, "John Misina"
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Contributions:13

There's not a risk of having pmi added to your payment later during the term of your loan. However, if the value drops it can limit your ability to refinance with favorable terms and if you have a balloon note the L-T-V ratio would be reevaluated at that time.

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February 14

Clay Branch, "Georgia Loans"
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- (1 review)
Contributions:7832

nntong is planning a cash in refi, not a purchase.

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February 14

Mark Gelbman, "Mark Gelbman"
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Contributions:222

Have you considered putting less than 20% down, asking the seller to pay the mortgage insurance for you at closing, and bank the difference. It may make more sense depending on where you are buying.

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February 14

Howard Vernick, "HowardVernick"
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- (2 reviews)
Contributions:47

You will not have to purchase mortgage insurance if you put 20% down, and if the property loses value the lender will be at risk and cannot require you to purchase mortgage insurance.

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February 13

Dave Skow, "daveskow"
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- (14 reviews)
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No ...mortgage insurance will not be added if the lty goes over 80% after you close on your loan

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February 13

Clay Branch, "Georgia Loans"
- 5.0/5.0
- (1 review)
Contributions:7832

nntong2007, NO. if your home lost $100,000 in value the day after you refinance and your loan to value goes from 80% to 140% there is no mortgage insurance added after the fact.