Finance
What is a 'loan-to-value ratio' (LTV) in Delaware mortgage lending?
AThe ratio of the loan interest rate to the property's appraised value
BThe percentage of the property's appraised value that is being financed — calculated as loan amount divided by appraised value✓ Correct
CThe ratio of the borrower's monthly debt payments to their gross monthly income
DThe percentage of the loan amount that the lender charges as an origination fee
Explanation
Loan-to-value (LTV) ratio equals the loan amount divided by the property's appraised value, expressed as a percentage. A lower LTV (higher down payment) reduces lender risk. Conventional loans typically require LTV of 80% or less to avoid private mortgage insurance (PMI).
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