If a loan has to be funded quickly, the Loan to Value is a factor which determines how quickly the loan could be funded. (Not the only factor but a factor). Private Money lenders are obviously more conservative with loan to value now than they were even six months ago. Particularly on less desirable properties such as undeveloped land or half-finished homes, the loan to value requirements are getting lower and lower.
For example, raw, (unentitled) land is restricted to between 35-55% loan to value. Improved land (utilities, water, power, road), is maxed at around 65% loan to value. Only properties with completed structures are able to attract 75% loan to value and higher. And obviously income producing properties are able to obtain the highest loan to value.
However, depending on the characteristics of the subject property, these percentages are flexible.
Carefully considering your loan to value in your initial loan request is crucial in the swiftness of the loan being funded. If you submit a request with a loan to value that is too high for your property type or characteristics, your loan request may never see the light of day.
But what if you shoot to low? Like the terms of the loan, the loan to value is also negotiable with the lenders prior to closing.
Posted by Corey Curwick on February 1, 2009 http://www.privatemoneyutah.com
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