LTV – The Key to the Underwater Mortgage

If you’re wondering whether or not you’re in an underwater mortgage, the key is to understand your loan to value, or LTV, ratio. The LTV reflects how much you owe as a percentage of the total value of your house. So, for example, if you originally took out a $130,000 mortgage on a house that was appraised at $150,000, your LTV ratio would be 87%. In other words, you would then owe 87% of what the house was actually worth-a win for you once the mortgage was paid off, provided that the property value didn’t change. Which, of course, never happens, does it?

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