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I don't know what sort of math you're doing
Old 05-05-2018, 12:25 AM
bankworking bankworking is offline
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Default I don't know what sort of math you're doing

Home equity loan. Loan on the value of your house that is not borrowed against already from your 1st mortgage.

House worth $100,000? Got a $70,000 mortgage on it? You got $30,000 in equity!

But here's the thing: sometimes you don't get approved to 100% of the value of your house. Sometimes you get approved for, let's say 90%.

This is the math for 90% loan-to-value.
House worth $100,000. 90% of this is $90,000. That is the amount you may have borrowed against your house. Have a $70,000 1st mortgage already? Then your approval is up to $20,000.

Does that make sense? It's not really that hard, is it?

And yet, repeatedly, customers will argue with this. Because for some reason, being approved for 90% loan-to-value translates in their mind to being approved for 90% of the remaining equity. So, in the above example, they say: house worth $100,000. Have $70,000 loan already on it. $30,000 in equity left. 90% of that is $27,000.


No, no, no, no, NO.

If you got a loan for $27,000, that would be 97% loan-to value. 70k + 27k = 97k. 100k value. 97% loan-to-value. NOT 90% loan-to-value.

I mean, seriously, how does that even make sense?
Say you have a house worth $100,000 and a $50,000 mortgage on it. This means you are already at 50% loan-to-value. You are already borrowing up to 50%. By your math, you could borrow 50% of what is left: another $25,000, and somehow still be at only 50% loan-to-value?

Now I admit, I do get math, but is it really that difficult to understand?

Old 05-05-2018, 01:03 AM
gerund's Avatar
gerund gerund is offline
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Quoth bankworking View Post
And yet, repeatedly, customers will argue with this.

No, no, no, no, NO.
Because they want it to be their way. They don't really care how the figures work, they want more than you are offering and they think that bargaining with you will get them that.

Also they may have expectations as to what they need. When you aren't going to give them that pre-conceived figure they assume you are making some sort of mistake. Or that an argument will set you straight.

Old 05-05-2018, 01:17 AM
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csquared csquared is offline
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It is Customer Math. It is based on Customer Logic. You know, "10% coupon + 20% coupon = 30% off"

It is right up there with Customer Standard Time.
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Old 05-05-2018, 09:04 PM
Ironclad Alibi's Avatar
Ironclad Alibi Ironclad Alibi is offline
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I can do also math the bad way. The bank says the loans can be 90% of the value of their house. The figures are above.

But the customer say they want 90% of the 30K. In doing that they are say their house is worth 30k, not 100K, so they can have a loan of 27K. But they already have a loan of 70K. Therefore they have to pay up 43K to bring the loan ratio down to 90%.
"I don't have to be petty. The Universe does that for me."

Old 05-06-2018, 11:03 AM
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Argabarga Argabarga is offline
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If people could do math, we wouldn't need 90% of all finance-related occupations.
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Old 05-06-2018, 06:32 PM
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CyberLurch CyberLurch is offline
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Quoth Argabarga View Post
If people could do math, we wouldn't need 90% of all finance-related occupations.
If people could do math, the rich couldn't get richer, could they?
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