In real estate transactions, what does the acronym LTV stand for?

LTV stands for Loan To Value, which is a financial term used in real estate to express the ratio of a loan to the value of the property being purchased. This ratio is crucial in determining the amount of financing that a lender is willing to provide based on the appraised value of the property. A higher LTV ratio indicates a greater risk for the lender, as it means a larger portion of the property's value is financed through a mortgage. Generally, lenders prefer lower LTV ratios because they suggest greater borrower equity, which can lead to lower default risks.

Understanding LTV is essential for buyers, lenders, and real estate professionals as it affects loan approval, interest rates, and the overall terms of the mortgage. This metric helps in assessing the financial health of a borrower and influences the decision-making in the lending process.