Finance
Loan-To-Value Ratio – Why it is important?
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Loan-To-Value Ratio – Everything You Need to Know
A loan-to-value ratio refers to the percentage of the total loan amount that exceeds the value of the collateral. This percentage can greatly affect interest rates and the selling price of a home. In many cases, this number is set at 80% or higher.
Here are some common examples. When should you avoid going over 80%? 80% is the magic number, but it is not always the best rule of thumb.
80% is the magic number for loan-to-value ratios
Typically, lenders require at least 20 percent of the home’s value as down payment, but you can buy a home with as little as 3 percent down.
A loan to value ratio of 80% or less means you have more equity in your home, which means lenders are less likely to lose money if you default.
Below 80%, however, you may be required to pay private mortgage insurance, which increases your monthly payment. But don’t worry: there are ways to avoid paying PMI and get a low loan-to-value ratio.
First, consider your accounts receivable. Most lenders will value accounts at 80% or lower if they are less than 30 days old. However, some lenders won’t bother to look at an account’s age until it is 90 days old.
In this case, you’d be best off with a loan to value ratio of 60 percent for accounts under 30 days. On the other hand, if you have a second mortgage or HELOC, the LTV may be 80 percent or less.
Despite the myth that 80 percent is the magic number for loan-to value ratios, it works. Ideally, you should aim for an LVR of 80 percent or more.
This is the magic number that helps you to buy a house with the right amount of equity. It also makes it possible to borrow for more than the actual value of the house, which is another important factor.
80% is the minimum down payment
If you have a decent credit score, a 20% down payment is sufficient to secure an 80% loan to value ratio. An 80% LTV is considered a good loan-to-value ratio, as it presents less risk to lenders.
A low loan-to-value ratio also minimizes your need to pay mortgage insurance, which is necessary with loans above 80% LTV. For many home buyers, 20% down payment is simply not an option. Fortunately, there are perks for those who put down 20% or more.
In most cases, a 20% down payment will yield an 80% loan-to-value ratio, which is the flipside of the minimum down payment.
The appraised value of your home is equal to the purchase price, minus any down payment.
If you have an 80% loan-to-value ratio, lenders will base their lending decision on this number, not the sales price. Using an 80% LTV ratio means that you will qualify for more affordable mortgage rates and terms than if you had put less money down.
The minimum down payment for loan to value ratios is often set at 80%, which is equivalent to the lowest mortgage loan terms. As the LTV ratio increases, your interest rate will increase, so it’s important to make sure you can afford the monthly payments until you have enough money saved.
Saving for a large down payment can take time, but it will be worth it in the long run. If you have enough savings, you can buy a cheaper home that has a higher down payment, which may allow your current savings to be more valuable.
80% is the maximum loan-to-value ratio
A loan-to-value (LTV) ratio is the percentage of a home’s value that a borrower can borrow from a lender. The maximum LTV can range from 70% to 90%, but it is usually the higher of the two.
Although 80% is the most common LTV, other types of loans can have higher LTVs. For example, a conventional loan with a 95% LTV would require a down payment of just over 30% of the purchase price.
The lender would then sell the property to cover the remaining portion of the loan. In such a scenario, a high LTV would require private mortgage insurance, which would be costly and inconvenient.
The LTV ratio is used by lenders to determine how much of a risk a borrower is willing to take. The higher the ratio, the more risky a lender will be, and the greater the risk.
A borrower with a high LTV should avoid high-risk mortgages, which may require additional insurance for the lender. Using a higher LTV than the maximum, however, will increase the amount of interest that is payable to the lender.
Depending on your financial situation and goals, a lower LTV is a good option. The government has created programs to help underwater homeowners refinance their loans, which often results in lower monthly payments and reduced mortgage insurance.
However, this option is not feasible for many home buyers. If you need a higher down payment, a lower loan-to-value ratio is the way to go. A higher LTV will increase your down payment by up to 20%.
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The Fascinating Universe of Collectible American Coins
Did you know gold has been a go-to for people wanting to diversify their investments and guard their income for centuries? Believe it or not, in today’s topsy-turvy economy, gold’s steady yields and proven durability are hot commodities for investors worldwide.
One of the trendiest ways to convert greenbacks into gold is by purchasing gold bars and coins.
Gold coins might be particularly tempting to investors due to their snazzy aesthetic and historical value–in addition to their monetary worth. But where to start–that’s the million dollar question? With so many gold coins out there, how do you decide what (and how) to bet on?
Golden Eagles Soaring High – American Gold Eagle Coins
Let’s dive in with the American Gold Eagle coins — a red-hot favorite and a well-known player in the gold coins market.
The U.S Mint whips up these 22-karat gold coins decorated with a Lady Liberty design on the obverse side, while the reverse side flaunts a bald eagle nesting or a bald eagle’s head, year-dependent.
And here’s what’s also interesting–you can claim these American Gold Eagle coins in various weights: 1 oz, 1/2 oz, 1/4 oz and 1/10 oz. The same goes for its ‘cousin’– the American eagle silver coin.
The Canadian Maple Leaf–Not Quiet American, but Close Enough
The 24-karat gold Canadian Gold Maple Leaf coin, sculpted by the Royal Canadian Mint, is an absolute stunner.
Hitting the ground in 1979, this golden wonder was in toe-to-toe competition with the South African Gold Krugerrand and is still regarded as one of the world’s purest and most coveted gold bullion coins.
The design? A maple leaf on the obverse side and an image of Queen Elizabeth II on the reverse.
What’s rad is that Canadian Gold Maple Leaf coins come in an array of weights, from 1/25 oz all the way up to 1 ounce.
Unleashing the Golden Buffalo – American Gold Buffalo Coins
Say hello to the American Gold Buffalo coin–another popular (and very favored)choice among investors and collectors alike.
The design is a tribute to the 1913 Buffalo Nickel conceived by renowned James Earle Fraser. You’ll see a Native American chief’s profile on the obverse side and an American buffalo on the reverse.
What’s fun to note is that American Gold Buffalo coins are 24 karats—higher purity than American Gold Eagle coins.
The Golden Wrap Up
Dropping some money into gold coins can be a savvy strategy to protect your overall investment bundle from losses and fend off inflation.
The coins discussed above are top-notch options for anyone keen on adding a dash of the shiny metal to their investment portfolio or who gets a kick out of curating a collection.
Always remember — before making any investment decision, do your legwork, contemplate your investment goals and risk tolerance, and seek advice from a financial guru for individualized guidance based on your unique financial situation. Good Luck!
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Top 13 Richest Cities In The World By Number of Millionaires
We live in an era of rapid economic growth and prosperity. Many cities around the globe have become thriving hubs of wealth, attracting millionaires from various industries.
In this article, we will explore the top 13 richest cities in the world by the number of millionaires. By understanding these prosperous urban centers, we can glean valuable insights into the global economy and the distribution of wealth.
1. New York City, United States
New York City, often referred to as the Big Apple, is undoubtedly one of the wealthiest cities globally. With a high concentration of millionaires and billionaires, it is home to the world’s largest financial market, the New York Stock Exchange. The city’s vibrant economy is powered by diverse sectors, including finance, real estate, technology, and media.
Key Industries:
- Finance
- Real Estate
- Technology
- Media
2. Tokyo, Japan
The bustling capital of Japan, Tokyo is a hub of commerce and innovation. With its strong economy, the city has attracted numerous millionaires who have made their fortunes in various industries. Tokyo’s Stock Exchange is the third-largest in the world, contributing significantly to the city’s wealth.
Key Industries:
- Technology
- Manufacturing
- Finance
- Retail
3. London, United Kingdom
A global center for finance and culture, London is home to a large number of millionaires. Its status as a financial capital has attracted wealthy individuals in banking, hedge funds, and private equity. Additionally, the city’s thriving arts and cultural scene attracts high net worth individuals from around the world.
Key Industries:
- Finance
- Real Estate
- Arts and Culture
- Technology
4. San Francisco, United States
San Francisco and the surrounding Silicon Valley have become synonymous with technological innovation and entrepreneurship. The city’s thriving tech ecosystem has generated a significant number of millionaires and billionaires, thanks to the success of companies like Apple, Google, and Facebook.
Key Industries:
- Technology
- Venture Capital
- Biotechnology
- Green Energy
5. Hong Kong, China
Hong Kong, a Special Administrative Region of China, is a major financial hub in Asia. Its strategic location and business-friendly environment have made it a magnet for wealthy individuals in finance, real estate, and trade. The Hong Kong Stock Exchange is one of the largest and most active in the world.
Key Industries:
- Finance
- Real Estate
- Trade
- Retail
6. Sydney, Australia
As Australia’s most populous city, Sydney has a diverse and robust economy. The city’s natural beauty, high quality of life, and thriving business sectors have made it a popular destination for millionaires. Its key industries include finance, real estate, tourism, and technology.
Key Industries:
- Finance
- Real Estate
- Tourism
- Technology
7. Singapore
Singapore is a small island nation with a powerful and dynamic economy. Its strategic location as a global trade hub has attracted wealthy individuals from various industries. The city-state’s pro-business environment, excellent infrastructure, and high quality of life make it a top choice for millionaires.
Key Industries:
- Finance
- Trade
- Real Estate
- Technology
8. Zurich, Switzerland
Zurich is Switzerland’s largest city and a global center for banking and finance. Its stable economy, low tax rates, and renowned private banking sector have attracted a significant number of millionaires. The city is also home to major international corporations and a growing technology sector.
Key Industries:
- Finance
- Pharmaceuticals
- Technology
- Manufacturing
9. Los Angeles, United States
Los Angeles is a global entertainment hub, known primarily for its thriving film and television industry. As the home of Hollywood, the city has attracted numerous millionaires and billionaires involved in media, entertainment, and technology.
Los Angeles also has a strong presence in industries like aerospace, fashion, and tourism.
Key Industries:
- Entertainment
- Media
- Technology
- Aerospace
10. Mumbai, India
As India’s financial capital, Mumbai is home to the country’s largest corporations, stock exchanges, and banking institutions. The city’s growing economy has generated a significant number of millionaires, particularly in industries such as finance, real estate, and technology. Mumbai is also known for its thriving Bollywood film industry.
Key Industries:
- Finance
- Real Estate
- Technology
- Entertainment
11. Paris, France
Paris, the romantic capital of France, is not only known for its rich cultural heritage and history but also for its robust economy. As a major global financial center, Paris has attracted numerous millionaires who have made their fortunes in industries such as fashion, finance, luxury goods, and tourism.
Key Industries:
- Finance
- Fashion
- Luxury Goods
- Tourism
12. Toronto, Canada
Toronto is Canada’s largest city and economic powerhouse. The city’s thriving economy is driven by diverse industries, including finance, technology, and real estate. Toronto’s stock exchange is the largest in Canada and the ninth-largest in the world, contributing significantly to the city’s wealth.
Key Industries:
- Finance
- Real Estate
- Technology
- Life Sciences
13. Shanghai, China
As one of China’s most populous and prosperous cities, Shanghai has experienced rapid economic growth in recent decades. The city is a global financial hub and home to the Shanghai Stock Exchange, one of the world’s largest. Key industries in Shanghai include finance, real estate, and technology.
Key Industries:
- Finance
- Real Estate
- Technology
- Manufacturing
Conclusion
The top 13 richest cities in the world by the number of millionaires showcase the diversity and strength of the global economy.
From finance hubs like New York City and London to technology centers like San Francisco and Tokyo, these cities represent the pinnacle of wealth and success.
As the world continues to evolve, we can expect these urban centers to remain at the forefront of innovation, driving economic growth and prosperity.
Frequently Asked Questions (FAQs)
1. Which city has the most millionaires?
New York City currently has the highest number of millionaires, thanks to its strong economy and status as a global financial capital.
2. Which industries are most prevalent in these wealthy cities?
Key industries among these cities include finance, real estate, technology, and trade. However, each city has its unique mix of thriving sectors, such as entertainment in Los Angeles and luxury goods in Paris.
3. What factors make a city attractive to millionaires?
Factors that attract millionaires to a city include a strong economy, business-friendly environment, high quality of life, and opportunities for investment and wealth creation. Additionally, cities with well-developed infrastructure, excellent healthcare, and education systems, as well as cultural and recreational opportunities, are also attractive to high net worth individuals.
4. How does the concentration of millionaires impact a city’s economy?
A high concentration of millionaires can contribute to a city’s economic growth by driving investments, creating job opportunities, and stimulating local businesses. Their wealth and spending can also contribute to the city’s tax revenue, helping to fund public services and infrastructure projects.
5. Are there any emerging cities that could make this list in the future?
Emerging cities like Dubai, United Arab Emirates; Bangalore, India; and São Paulo, Brazil have experienced rapid economic growth and are home to a growing number of millionaires. As these cities continue to develop, they could potentially join the ranks of the top 13 richest cities in the world.
6. Do these cities also have a high number of billionaires?
Yes, many of these cities also have a high concentration of billionaires. For example, New York City, San Francisco, and Hong Kong are known for their significant number of billionaires in addition to millionaires.
7. How do wealthy individuals contribute to a city’s cultural scene?
Wealthy individuals often invest in and support the arts, museums, and cultural institutions in their cities. They may also sponsor events, donate to charitable causes, and commission works of art, contributing to a vibrant and diverse cultural scene.
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