In an ever constricting…
…market, it may be tempting to consider an?over-equity? loan, which allows you to borrow up to 125% of your homes appraised value.
And while there may be some situations where a high-loan-to-value loan makes sense, your mortgage expert should carefully discuss and explain the consequences of borrowing more than your homes worth.
To begin with, because of the extraordinary risk associated with this type loan, it has an equally high interest rate; easily 5 - 10 percent higher than your standard 80% loan.