What is the maximum loan-to-value ratio typically allowed for a cash-out refinance compared to a HELOC on the same property?
Correct Answer
C) HELOCs typically allow higher combined LTV ratios than cash-out refinances
HELOCs typically allow higher combined loan-to-value ratios (often up to 80-90%) compared to cash-out refinances (typically limited to 80% LTV) because HELOCs are second liens and pose different risk profiles to lenders.
Why This Is the Correct Answer
HELOCs typically allow higher combined loan-to-value ratios (often up to 80-90%) compared to cash-out refinances (typically limited to 80% LTV) because HELOCs are second liens and pose different risk profiles to lenders.
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