A property is valued at $500,000. The borrower is obtaining a first mortgage of $400,000 and a HELOC of $50,000. Six months later, the property value drops to $450,000. What is the current CLTV ratio?
Correct Answer
C) 100%
CLTV (Combined Loan-to-Value) is calculated using the current property value, not the original value. Current CLTV = ($400,000 + $50,000) ÷ $450,000 = $450,000 ÷ $450,000 = 100%. This tests understanding that CLTV calculations use current property values, which can change after origination.
Why This Is the Correct Answer
CLTV (Combined Loan-to-Value) is calculated using the current property value, not the original value. Current CLTV = ($400,000 + $50,000) ÷ $450,000 = $450,000 ÷ $450,000 = 100%. This tests understanding that CLTV calculations use current property values, which can change after origination.
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Previous Question
A borrower is purchasing a $600,000 home with a first mortgage of $450,000 and a second mortgage of $90,000. They are paying $60,000 down. The first mortgage LTV is 75% and the CLTV is 90%. If the borrower later wants to eliminate PMI, and the property appreciates to $650,000, what would be the new LTV of the first mortgage assuming no principal reduction?
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