To qualify for an equity loan, you will need to have the required Loan to Value ratio. But what is it, why does it matter, and how do I figure mine out? If you know these things, you could probably save yourself some time.

The Loan to Value ratio is the difference between how much your house is worth and how much you still owe on your home. But being a ratio, is not the value of your home minus what you owe, it is the amount you still owe on your home divided by the total value of your home (the lowest assessed value).

There are basically three assessed values. There is the one given by a realtor when you are considering selling your home, there is the one given by your insurance company, and then another one by the tax office.

The tax office value is usually the lesser, and you can find this out by contacting your local city hall. (By the way, a fair value for your home is usually calculated by adding 10% to your taxed assessed value. A realtor will determine their value by making a comparison to similar homes recently sold in the area.)

Why this matter and how it can probably save you some time is because banks will not even consider giving you a loan on the equity in your home unless your Loan to Value ratio is somewhere between 80 and 90% or below.

Different banks have different standards, and that is why it is 80 to 90% and below. If it is below whichever one the bank requires, that is even better. Therefore, if you can calculate your LTV before you even go to the bank you may not need to do more.

First figure out your LTV. Then call your bank and see which percentage they require. If it is over 90%, you can save yourself the time of going to your bank. Either that or you can look for a new bank.

Do you want to learn the best way to escape paying interest? You can get my free ebook, How to Significantly Lower the Interest on All Your Loans, Including Your Mortgage, and That Without Refinancing.

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Alfred Spengly currently works with a company that has been registered with the better business bureau since 2006 with zero complaints. It is a company that strives for its customer's satisfaction, helping individuals and families manage their own money by providing the tools they need to establish their own financial security.

Personally, Alfred has worked in the financial field for almost 15 years.