Finance
The purpose of a loan-to-value ratio (LTV) requirement by a lender is to:
AEnsure the borrower has sufficient income to repay the loan
BProtect the lender's security interest by limiting the loan relative to property value✓ Correct
CCalculate the borrower's monthly payment
DDetermine the appropriate interest rate for the borrower
Explanation
The LTV ratio protects the lender by ensuring the loan does not exceed a percentage of the property's value. If the borrower defaults, the lender wants sufficient equity in the property to recover the loan through foreclosure.
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