FinanceQuestion 71 of 100
The loan-to-value (LTV) ratio is calculated as:
a.Down payment divided by the loan amount
b.Property value divided by the loan amount
c.Loan amount divided by the appraised value or price
d.Interest divided by principal
Explanation
LTV is the loan amount divided by the lesser of the appraised value or sale price, expressed as a percentage. A $200,000 loan on a $250,000 property is an 80% LTV. Higher LTVs mean less borrower equity and generally more lender risk.
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