Virginia State Real Estate Exam Practice Question
A low loan-to-value ratio indicates a
Correct Answer: C
Rationale: A low loan-to-value (LTV) ratio signifies that a borrower has a larger equity stake in the property, as they have financed a smaller portion of the property's value through a loan.
Option A is incorrect because a low LTV indicates higher equity, not lower. Option B is also wrong; lower LTV ratios generally suggest less risk of foreclosure, as borrowers are less likely to default when they have more equity. Option D misrepresents the concept, as a lower LTV reflects less leverage, not greater. Thus, a low LTV ratio correlates directly with higher equity in the property.
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