Resources > Glossary > Loan To Value Ratio

Glossary of Notary Public, Mortgage, Signing Agent, and Loan Signing Terms.

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Common Terms 1   Common Terms 2

Loan To Value Ratio

Function: noun

Definition 1:
The relationship between the amount of a loan and the appraised value of the property expressed as a percentage. Another definition of a loan to value ratio is the ratio of the first lien compared to the total appraised value of the real property. The loan to value ratio is one of the primary pieces of information a lender uses to identify what the risk factor is in a particular loan. A lender will rely on an appraiser to determine the value of a home. If there is more than one appraised value, the lender will generally use the appraisal with the lower value. Loans with a lower loan to value ratio often get a lower rate. Combined loan to value considers all of the lients against the house added up relative to the total value of the property.