125 Loan


Definition of "125% Loan"

Amos Allen
  Xtreme Realty Team

A mortgage loan for 125% of property value. Since such loans are only partly secured,
they have many of the characteristics of unsecured loans, including relatively high interest rates.
Rates are largely determined by the borrower's credit score, however, and can be quite reasonable
when the score is high. A drawback is that borrowers have difficulty refinancing 125% loans and
can't sell their house without defaulting unless they can come up with the additional cash required
to pay off the 125% loan.



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