Finance
What does 'loan-to-value ratio' (LTV) measure?
AThe borrower's income relative to the loan payment
BThe ratio of the loan amount to the appraised value of the property✓ Correct
CThe ratio of property taxes to home value
DThe interest rate relative to market rates
Explanation
LTV is calculated by dividing the loan amount by the appraised value (or purchase price, whichever is lower). Lenders use LTV to assess risk—higher LTV means higher risk.
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