When shopping for a loan, you will probably hear a number of acronyms and terms that are foreign to you. One of the most commonly used loan terms is LTV, or loan-to-value. So, what is LTV?
The loan to value ratio is a measurement of risk. Underwriters will look at the mortgage amount divided by the appraised value of the property to arrive at the LTV. The higher the LTV ratio, the greater the risk of the loan. Customers with a high LTV who are approved may be required to purchase mortgage insurance or pay extra points.
FORMULA
LTV Ratio = Loan Amount/Appraised Value of the Property
Showing posts with label ltv ratio. Show all posts
Showing posts with label ltv ratio. Show all posts
Thursday, January 3, 2008
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