Tennessee Real Estate Exam Practice Question
A low loan-to-value (LTV) ratio indicates a
Correct Answer: C
Rationale: A low loan-to-value (LTV) ratio signifies that the borrower has a larger proportion of equity in the property, reflecting a lower amount of debt relative to the property's value. This increased equity can enhance financial stability and reduce risk.
Option A is incorrect, as a low LTV indicates higher equity, not lower. Option B is misleading; a low LTV generally reduces foreclosure risk since the borrower has more invested. Option D is also wrong; a low LTV means less leverage is being used, not greater. Therefore, a low LTV ratio is associated with a stronger financial position for the borrower.
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