A borrower is refinancing a $350,000 property. The existing first mortgage balance is $200,000, and they want to take $75,000 cash out. What will be the new LTV ratio?
Correct Answer
C) 78.57%
New loan amount = Existing balance + Cash out = $200,000 + $75,000 = $275,000. LTV = New loan amount ÷ Property value = $275,000 ÷ $350,000 = 78.57%. This tests understanding of cash-out refinance LTV calculations where the new loan amount includes both the payoff and cash to the borrower.
Why This Is the Correct Answer
New loan amount = Existing balance + Cash out = $200,000 + $75,000 = $275,000. LTV = New loan amount ÷ Property value = $275,000 ÷ $350,000 = 78.57%. This tests understanding of cash-out refinance LTV calculations where the new loan amount includes both the payoff and cash to the borrower.
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