Loan-to-Value
LTV
Loan-to-value ratio compares the loan amount to the value of the collateral. It measures how much of the asset's value is being financed.
Lower LTV ratios generally reduce lender risk and can result in better terms, especially for mortgages. High LTV loans may require additional collateral or insurance.
Related Terms
Underwriting
Underwriting is the process of evaluating a borrower's risk and deciding whether to approve a loan. ...
Mortgage
A mortgage is a loan used to purchase real estate, where the property serves as collateral. The borr...
Collateral
Collateral is an asset that a borrower pledges to a lender as security for a loan. If the borrower d...
Principal
Principal is the original amount of money borrowed in a loan or the original amount invested. It doe...
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