If a borrower has a loan amount of 225,000 and the lower of appraised value and purchase price is 315,000, what is the LTV?

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Multiple Choice

If a borrower has a loan amount of 225,000 and the lower of appraised value and purchase price is 315,000, what is the LTV?

Explanation:
LTV shows how much of the property’s value is being financed, so you divide the loan amount by the lower of the appraised value or the purchase price. Here, the loan is 225,000 and the lower value is 315,000. 225,000 ÷ 315,000 = 0.714285..., which is 71.4285%, so about 71.4%. Therefore, the loan-to-value ratio is 71.4%.

LTV shows how much of the property’s value is being financed, so you divide the loan amount by the lower of the appraised value or the purchase price. Here, the loan is 225,000 and the lower value is 315,000.

225,000 ÷ 315,000 = 0.714285..., which is 71.4285%, so about 71.4%.

Therefore, the loan-to-value ratio is 71.4%.

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