Choosing the best loan
Loan-to-Value (LTV) options
Another choice you'll be presented with if you need or want a high loan-to-value (LTV) mortgage is its structure. Options for high-LTV mortgages include: VA, FHA, Private MI, and 1st and 2nd mortgage combinations.
- VA Loans: If you are a veteran of the US armed forces, check with your lender regarding VA loan possibilities.
- FHA Mortgage: A high-LTV mortgage insured by the Federal Housing Administration (FHA), a government agency. There are certain limitations with FHA loans; check with your lender regarding these options.
- Private Mortgage Insurance (MI): Another option for high-LTV mortgages, with fewer restrictions than a VA or an FHA mortgage. Private MI is similar to a VA-guaranteed or an FHA-insured mortgage in that it reduces the lender's risk and allows lenders to make high-LTV loans.
- MI Advantages: Private MI offers more options, such as monthly, annual and single premium rates. Another advantage is that you can cancel mortgage insurance once the LTV of your mortgage goes below 80%. If you have monthly premiums, canceling your MI reduces your monthly payment. If you used a single premium and you cancel within five years, you may receive a refund of a portion of the premium you paid.
