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What does LTV stand for?

By
Real Estate Agent with Keller Williams Realty Beverly Hills

LTV is the acronym for Loan-To-Value ratio.  It is a term used in real estate financing that refers to the ratio between the loan on a property and it's total value.  For instance, if someone has a $500,000 loan on a million dollar property, that is a 50% Loan-To-Value ratio.

Realtors and lenders will also use the term TLTV, or Total-Loan-To-Value.  This term is used when additional debts, such as a second or third mortgage, are secured by the property.

It is always more desirable to have a lower LTV.  The higher the equity in a property, the more assured a lender can be that they're investment is protected.  Lenders and consumers alike have learned a hard lesson in the recent past with risky lending practices that resulted in very, very high Loan-To-Value ratios.

Comments (1)

Jason Tucker
Richmond, VA

Thanks James.  Always good for simple explanations!

Oct 02, 2009 05:15 AM