Finance
What does LTV (loan-to-value ratio) measure?
AThe ratio of the borrower's income to the monthly mortgage payment
BThe ratio of the loan amount to the appraised value or purchase price of the property✓ Correct
CThe ratio of total debt to the borrower's gross income
DThe ratio of the down payment to the total loan cost
Explanation
LTV = Loan Amount ÷ Appraised Value (or purchase price, whichever is lower). A higher LTV means greater risk for the lender. Conventional loans with LTV above 80% typically require PMI.
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