How NOT to Sound like an Idiot - LTPP, LTV, LTC - multifamily

Описание: Understanding Loan to Purchase Price (LTPP), Loan to Value (LTV), and Loan to Cost (LTC)

Objective:

To understand the concepts of Loan to Purchase Price (LTPP), Loan to Value (LTV), and Loan to Cost (LTC) in real estate financing.

Key Steps:

Loan to Value (LTV) and Loan to Purchase Price (LTPP):

Calculate LTV by dividing the loan amount by the property value.

Calculate LTPP by dividing the loan amount by the purchase price.

Typically used when purchasing a property.

Loan to Value (LTV) in Refinancing:

LTV is used when refinancing a property.

Calculate LTV by dividing the loan amount by the property value.

Loan to Cost (LTC):

LTC is used when construction or renovation costs are involved.

Calculate LTC by dividing the loan amount by the total cost of the project, including construction costs.

Banks may consider providing higher loan amounts if they believe the construction will increase the property value.

Cautionary Notes:

Ensure accurate calculations of loan amounts, property values, and purchase prices to avoid errors in LTV, LTPP, and LTC calculations.

Understand the specific requirements and terms of the lending institution regarding loan-to-value ratios and loan-to-cost ratios.

Tips for Efficiency:

Keep track of all financial details accurately to calculate LTV, LTPP, and LTC effectively.

Communicate clearly with the lending institution to understand their criteria for loan approvals based on LTV, LTPP, and LTC ratios.

Seek guidance from financial experts or professionals if unsure about any calculations or terms related to real estate financing.

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