A lender is considering whether to approve a mortgage loan on a home recently appraised at a value of $500,000. If the borrower is willing to make a down payment of $100,000, determine the loan-to-value ratio associated with this property.

Question

Quizplus · Accepted Answer

The loan-to-value (LTV) ratio is calculated by dividing the mortgage loan amount by the appraised value of the property. In this case, the mortgage loan amount would be $500,000 - $100,000 = $400,000. So, the LTV ratio would be $400,000/$500,000 = 0.8 or 80%. Therefore, the best choice is D.

A Lender Is Considering Whether to Approve a Mortgage Loan