Loan To Value
What is it? A metric used by lenders to help them during the underwriting process of the mortgage. This value is used to help determine the risk of the mortgage to the bank. The theory is that if the value of the property is significantly greater than the mortgage they are issuing, then their risk is greatly reduced.Loan to Value = Mortgage Amount / Appraised Property Value
A bank will often have a requirement of a 75% or 80% LTV to issue a loan without PMI. The lower the LTV ratio the more secure for the lender.
Added By: Tyler
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