Looking to get a basic definition for the acronym LTV? Learn more about this term here.
LTV is a commonly used acronym that stands for Loan-to-Value and refers often to a Loan-to-Value Ratio. The Loan-to-Value ratio shows the relationship between the amount borrowed and the appraised value of the property.
You can calculate LTV easily by taking the Loan Amount divided by the Appraised Value which equals the Loan-to-Value Ratio.
LTV Ratio = Loan Amount / Appraised Value
This ratio helps a lender determine how much equity is in the home when a homeowner attempts to refinance or applies for a home equity loan. It can also be used by a lender to determine what interest rate they might qualify for or how much risk is associated with the loan.