Why is private lending on a first lien of a single family residential home an amazing and perhaps the best financial strategy today? Here is 1 reason why!
The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. The term is commonly used by banks to represent the ratio of the first mortgage lien as a percentage of the total appraised value of real property. For instance, if a someone borrows $75,000 to purchase a house worth $150,000, the LTV ratio is $75,000 to $150,000 or $75,000/$150,000, or 50%.
The property is the first layer of protection for the private lender. Currently, our Partners are seeing opportunities that are available for funding with LTVs between 45 and 65 percent, which means the property in question would have to drop in value (from today’s prices) for there to be risk due to the value. That is a level of decline which has almost never occurred in history.
We believe private lending is the best financial strategy today!
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