FinancingLtvMEDIUM
The loan-to-value (LTV) ratio is calculated by:
Correct Answer
B) Dividing the loan amount by the property value
LTV = Loan Amount / Property Value. For example, a $160,000 loan on a $200,000 property = 80% LTV. Lenders use LTV to assess risk; higher LTV means more risk.
Answer Options
A
Dividing the property value by the loan amountB
Dividing the loan amount by the property valueC
Subtracting the down payment from the valueD
Adding the loan amount to the valueVideo Explanation2 min
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Related Topics & Key Terms
Related Topics:
mortgage-insurance-requirementsdebt-to-income-ratioloan-qualification-standards
Key Terms:
loan-to-value ratioLTVmortgage underwritingPMIdown payment
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