Finance
What does 'LTV ratio' stand for and what does it measure?
AA. Loan-to-Value — the ratio of the loan amount to the appraised value or purchase price (whichever is lower)✓ Correct
BB. Land-to-Value — the land's percentage of total property value
CC. Liability-to-Value — the ratio of total debt to net worth
DD. Lease-to-Value — the capitalized value of the lease stream
Explanation
Loan-to-Value (LTV) = Loan Amount ÷ Appraised Value (or purchase price, whichever is lower). A lower LTV means more equity and less risk for the lender. High LTV loans (low down payment) typically require mortgage insurance.
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