Checking out the Loan-to-Value Ratio
Your equity facets prominently into what exactly is referred to as loan-to-value ratio, or LTV. The loan-to-value ratio is determined by dividing your loan that is current balance the appraised worth of the house. Therefore, you will divide $160,000 into the appraised value of the property вЂ“ $250,000 вЂ“ to get a loan-to-value ratio of 0.64 if you have $90,000 of equity and your remaining loan balance is $160,000.
This number shows that 64 percent associated with the household happens to be within the control of this mortgage owner and that just 33 % is truly yours. Consequently, your equity of $90,000 represents 33 percent regarding the total value of the house it self.