Loan to Value Ratio

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Loan to Value Ratio

1. In mortgages, the ratio of the amount of a potential mortgage to the value of the property it is intended to finance, expressed as a percentage. It is used as a way to assess the risk of making a particular mortgage loan. A lower loan-to-value ratio is seen as a lower risk to the lender. Most mortgage lenders require a maximum loan-to-value ratio of 75%. That is, a borrower is usually expected to pay for 25% of the value of a property out-of-pocket.

2. More broadly, a ratio of the amount of a potential loan to the asset it is intended to finance. In addition to gauging the risk involved in making the loan, it tells the borrower whether or not the loan can be repaid if he/she sells the asset. This can be important if the borrower becomes unable make payments.
References in periodicals archive ?
If my property hasn't appreciated since the last time it was financed, current loan-to-value ratios are going to prevent any lender from lending me the full amount of the last mortgage," said Richard Pergolis, also a principal in Pergolis Swartz Associates.
Institutions' expected dollar losses are determined primarily by the distribution of loan-to-value ratios within their mortgage portfolios: Higher ratios are associated with higher mortgage default probabilities and loss severity rates.
Examples of reasons for exclusion from Residential Funding's other programs include, but are not limited to, higher debt-to-income ratios or higher loan-to-value ratios.
Although the HMDA date included information on applicant income, no information was collected on applicants' credit histories, loan-to-value ratios, debt-to-income or so called obligation ratios, and other factors that lenders commonly consider when they make mortgage loan decisions.
Mortgage loans underwritten pursuant to the Expanded Underwriting Guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the Standard Underwriting Guidelines.
7% of the mortgage loans were originated under other programs of Residential Funding that permit mortgage loans with loan-to-value ratios in excess of 95%.
Mortgage loans underwritten pursuant to the expanded underwriting guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios, and different documentation requirements than those associated with the standard underwriting guidelines.
00% of the mortgage loans that had loan-to-value ratios at origination in excess of 80%.
23% of the mortgage loans with combined loan-to-value ratios greater than 60% will have mortgage insurance policy from PMI Mortgage Insurance Co.
11% of the mortgage loans with combined loan-to-value ratios greater than 80% will have mortgage insurance policies from PMI Mortgage Insurance Co.
76% of the mortgage loans had loan-to-value ratios in excess of 80.