Example
Loan to Value Ratio
- Original Price of the home: $400,000
- Original Amount of Mortgage: $320,000
- Current Estimated home Value: $440,000
- Loan to Value Ratio: $320/$440 = 72%
- Total Loan Amount with LTV max of 85%: $374,000
- Amount Available to lend: $54,000
Debt to Income Ratio
- Total Mthly Income: $5,000
- Mthly Mortgage Payment- $320K @5%/yr: $1,300
- Increase Interest Payment from new HEL on $54K @ 5%: $225
- Other Payments (e.g. car, insurance): $200
- Total Monthly Debt: $1,725
- Debt-to-Income Ratio ($1,725/$5,000): 35%