FinancingLoan CalculationsMEDIUM
The loan-to-value (LTV) ratio is calculated by:
Correct Answer
B) Dividing the loan amount by the appraised value or purchase price, whichever is less
LTV is calculated by dividing the mortgage loan amount by the lesser of the appraised value or purchase price. For example, a $160,000 loan on a $200,000 property has an LTV of 80%.
Answer Options
A
Dividing the appraised value by the loan amountB
Dividing the loan amount by the appraised value or purchase price, whichever is lessC
Dividing the down payment by the purchase priceD
Dividing the interest rate by the loan termWhy This Is the Correct Answer
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Why the Other Options Are Wrong
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Deep Analysis of This Financing Question
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Background Knowledge for Financing
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Real World Application in Financing
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Common Mistakes to Avoid on Financing Questions
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Related Topics & Key Terms
Related Topics:
appraisalPMI-thresholddown-paymentlending-risk
Key Terms:
LTVloan-to-valuelesser ofappraised valuepurchase price
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