If the funds in your escrow account are projected to be below your required minimum balance at the lowest point in the 12-month period, you have a shortage. The more money you have to put down, the less you have to borrow, making your LTV and potentially your interest rate lower. The best way to a low LTV is to save as much as you can towards your down payment or deposit on your home. Higher LTVs mean the lender would be assuming more risk and could charge a higher interest rate in return. That translates into a lower interest rate. The lower your LTV, the less risk the lender takes on in extending that mortgage. As a borrower, LTV would be important to you because it influences the interest rate you would be paying for your loan. This number is important to lenders because it helps them understand the risk associated with the loan they’re extending. To calculate your LTV, first, divide your mortgage amount by the property value. LTV stands for loan-to-value and for mortgages, it’s the amount of your loan compared to the value of the property you’re buying.
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