Assume that houses in an area appreciate at the rate of 4 percent a year. A borrower expects to have a loan-to-value ratio of 90 percent. What would be the approximate expected appreciation rate on home equity EAHE)?

Question

Quizplus · Accepted Answer

The expected appreciation rate on home equity (EAHE) is calculated by dividing the appreciation rate by the loan-to-value ratio. Here, 4% appreciation divided by 10% equity (100% - 90% LTV) equals 40%.

Assume That Houses in an Area Appreciate at the Rate