👉 The refinance fluid, also known as the loan-to-value (LTV) ratio, is a critical financial metric used in refinancing loans. It represents the percentage of the loan amount that is borrowed against the current market value of the property being refinanced. For example, if a homeowner has a $300,000 mortgage on a $400,000 property, the LTV ratio would be 75% (300,000 / 400,000). This figure determines the maximum amount of additional funds that can be borrowed through refinancing, as it reflects the lender's perceived risk. A higher LTV ratio generally indicates a higher risk for the lender, potentially leading to more stringent lending criteria or higher interest rates. Conversely, a lower LTV ratio suggests a lower risk, which may result in more favorable refinancing terms.
