125% Loan

A 125% loan is a type of mortgage loan that allows borrowers to borrow up to 125% of the appraised value of their home. This means that the borrower can borrow more money than the purchase price of the home, which can be helpful for those who need a larger down payment or who want to make improvements to their home.

There are a few things to keep in mind before taking out a 125% loan. First, the interest rates on these loans are typically higher than those on conventional mortgages. Second, the down payment requirement is typically higher, as borrowers must put down at least 25% of the purchase price of the home. Third, 125% loans are often more difficult to qualify for, as lenders take into account more factors when making a decision on whether to approve a loan.

Despite these challenges, 125% loans can be a good option for borrowers who need a larger down payment or who want to make improvements to their home. However, it is important to carefully consider all of the costs and risks associated with these loans before taking one out.

Here are some additional details about 125% loans:

* The interest rates on these loans are typically higher than those on conventional mortgages. This is because lenders take on more risk when they make a 125% loan, as they are lending more money than the value of the home.
* The down payment requirement is typically higher, as borrowers must put down at least 25% of the purchase price of the home. This is because lenders want to make sure that borrowers have a stake in their home and are less likely to default on the loan.
* 125% loans are often more difficult to qualify for, as lenders take into account more factors when making a decision on whether to approve a loan. This includes factors such as the borrower's credit score, debt-to-income ratio, and employment history.

If you are considering taking out a 125% loan, it is important to speak to a qualified financial advisor to discuss the pros and cons of these loans and to make sure that you are aware of all of the costs and risks involved.