The Thriving Investor Success With Investing
A low loan-to-value ratio makes your note safer and increases its resale value. The loan-to-value ratio for your note is the sum of the current loan balance for your loan and all senior loans divided by the current market value of the property securing the note.
Loan-to-value ratio for a second loan having a current balance of $30,000, an underlying first deed of trust with a loan balance of $100,000 and a current property value of $200,000 is 65% (130,000÷ 200,000).
The priority of your note and deed of trust on the property (first position, second position, etc.) is critical to the note’s value and should be maintained with that in mind.