Finance
In New Mexico, the 'loan-to-value ratio' (LTV) is important to lenders because:
AIt determines the property's market value
BHigher LTV means less equity cushion and greater lender risk — lenders typically require PMI for LTVs above 80% on conventional loans✓ Correct
CIt sets the interest rate directly
DIt is required by federal law to be disclosed
Explanation
LTV measures the loan amount relative to the property's value. High LTV loans (less equity) have greater lender risk because there is less cushion between the loan balance and what the lender could recover in foreclosure. Higher LTV typically means higher rates and PMI requirements.
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