Finance
What is 'loan-to-value ratio' (LTV) and why do Oregon lenders care about it?
AThe ratio of monthly payment to home value; used to set insurance rates
BThe ratio of the loan amount to the appraised value; used to assess lending risk — higher LTV means greater lender risk✓ Correct
CThe ratio of down payment to annual income; used to determine creditworthiness
DThe ratio of purchase price to original construction cost; used to determine depreciation
Explanation
LTV = Loan Amount ÷ Appraised Value × 100. Higher LTV means less equity and greater risk for the lender if the borrower defaults and the property must be sold.
People Also Study
Related Oregon Questions
- An Oregon borrower has a deed of trust on their property. The borrower defaults on the loan. After the trustee's sale, if the sale proceeds are less than the amount owed, this is called a:Finance
- A property has a loan-to-value ratio (LTV) of 80%. The property is appraised at $420,000. What is the maximum loan amount the lender will provide?Real Estate Math
- A borrower is buying a $500,000 home with a conventional loan and 20% down payment. They want to know the loan-to-value (LTV) ratio. What is the LTV?Real Estate Math
- An Oregon purchase agreement specifies that the buyer must obtain financing at 'not to exceed 6.5% interest rate.' The buyer receives a loan offer at 6.75%. What is the effect?Contracts
- An Oregon borrower's loan is being 'serviced' by a company different from the original lender. 'Loan servicing' refers to:Finance
- A homebuyer who obtains a conventional loan with less than 20% down will typically be required to purchase:Finance
- A buyer purchases a $400,000 home with a 5% down payment. The lender requires PMI at an annual rate of 0.85% of the loan amount. What is the monthly PMI cost?Real Estate Math
- A buyer in Oregon uses an FHA loan. Who insures the lender against losses if the buyer defaults?Finance
Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Study This Topic
Practice More Oregon Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Oregon Quiz →