Capital is every firm’s driving force. No matter how much you try, without capital, you can’t run a company efficiently. Acquiring a loan from a bank can be challenging due to their extensive application procedure, which is why most Americans are switching to private hard money lenders. These lenders are known to use LTV as a major factor in making their final decision.

Understanding the LTV ratio is crucial for you to acquire a hard money loan. Let us dive deep into what an LTV ratio is and what its benefits are.

The Basics Of Loan-To-Value Ratio

Loan-to value ratio is usually used in hard money loan applications. It’s basically a ratio between your loan amount and the value of assets you possess. It’s an excellent metric for private money lenders to judge the risk when giving out loans. LTV ratios from 50-80% are realistic and excellent ratios where a loan deal can be closed. Any ratio above 80% is too risky for the private lender, and any ratio below 50% is unrealistic.

Why Is It Important?

Since the LTV ratio determines the level of lending risk, it’s one of the major determinants of the loan application outcome. The LTV ratio is a major part of the underwriting process for any private money lender. Since hard money lenders don’t consider credit scores and other lengthy checkups that banks carry out, they rely on the LTV ratio to make a decision. The LTV ratio also helps the private money lender determine how much money they’ll be able to gather if the borrower defaults on the loan payments.

Get Hard Money Loans In Atlanta Today

Understanding the LTV ratio can help you strike an excellent hard money loan deal. If you’re looking for a reputed private money lender to acquire hard money loans, visit Commercial Private Equity today. We’ve been serving our clients for over seventy-five years in the private money lending industry. We’ve developed a three-level loan program that offers loan deals at different LTV ratios. Our five different types of specialized loans, including construction loans, bridge loans, commercial loans, raw land loans, and workout loans, coupled with our loan programs, offer our clients maximum flexibility for their loan deals.

Get in touch with us today for more queries.