A borrower has a home appraised at $100,000 and still owes $70,000 on the home mortgage. If the lender insists on a required loan-to-value ratio of 70 percent, the homeowner's borrowing base must be $25,000.

Question

Quizplus · Accepted Answer

The loan-to-value ratio of 70% on a home appraised at $100,000 allows for a maximum loan of $70,000. Since the homeowner already owes $70,000, they have no additional borrowing base under this requirement.

A Borrower Has a Home Appraised at $100,000 and Still