Finance
What does the term 'loan-to-value ratio' (LTV) mean in mortgage lending?
AThe ratio of the borrower's income to the loan amount
BThe ratio of the loan amount to the appraised value of the property✓ Correct
CThe ratio of the down payment to the loan amount
DThe ratio of monthly payments to gross income
Explanation
Loan-to-value (LTV) ratio is calculated by dividing the loan amount by the property's appraised value. Lenders use LTV to assess lending risk; a higher LTV means more risk.
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