What Are Different Loan Scenarios?

Your Loan Size

The loan size is one of the most fundamental parts of your loan.

The loan size is usually judged with regard to the value of a property.

If the property is valued at $100,000 and the loan size is $90,000 the loan to value ratio is 90%.

This ratio is a vital factor lenders will consider to come to a decision if a loan is approved, what type of loan is approved, and what the total loan amount is.

Loan Types

There are many types of loan programs. You can choose between many different loan options, including 30 year fixed loans, 40 year loans, minimum payment option loans, interest only loans, and many others.

These different loans may need to be presented to you, the customer, in diverse ways.

For example, a 90% loan to value ratio may actually be divided into different loans.

For one loan type you may be able to get one loan for the 90% value of the property, for another loan type you may get an 80% loan for the first loan and a 10% second loan to get a total of 90%, and another loan type may require that the loan be split up into 70% and 20% loans.

Different Payments

You could wind up with very different payments if your loan is structured in a different way.

Second loans are commonly more expensive than first loans. They consistently come with much higher interest rates.

A loan that is a 70/20 split may be more pricey than an 80/10 split. This is due to the second loan is for 20% of the property’s value instead of just for 10%. The second loan, with its higher interest rate, is bigger in one situation than another.