Finance
What is 'loan-to-value ratio' (LTV) and why is it important to lenders?
AA. The ratio of monthly payment to monthly income
BB. The ratio of the loan amount to the property's appraised value, indicating lender risk exposure✓ Correct
CC. The ratio of interest to principal in a mortgage payment
DD. The ratio of the purchase price to the listing price
Explanation
LTV = Loan Amount / Appraised Value × 100%. A higher LTV means the lender has more money at risk relative to the collateral's value.
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