Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

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Prepare for the CAPS Exam with a comprehensive study of Module 2. Utilize our practice resources filled with flashcards, multiple choice questions, and thorough explanations to ensure your success!

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What does LTV stand for in mortgage lending?

Loan to Value
Liquidity to Value
Line to Value
Lease to Value

The correct answer is: Loan to Value

In mortgage lending, LTV stands for Loan to Value. This term is a financial ratio that compares the amount of the loan secured against a property to the appraised value of that property. It is commonly used by lenders to assess the risk of a mortgage loan. A lower LTV ratio generally indicates less risk for the lender, as it signifies that the borrower has a larger equity stake in the property, while a higher LTV ratio suggests higher risk since it shows that the borrower is financing a larger portion of the property's value. Therefore, LTV is a crucial factor in determining loan eligibility, interest rates, and required mortgage insurance. In contrast, the other terms are not standard ratios used in mortgage lending. Liquidity to Value does not apply in this context, Line to Value is not a recognized financial term in relation to mortgages, and Lease to Value also does not pertain to loan assessment. Thus, the association of LTV with Loan to Value is paramount in understanding mortgage-related financial analysis.