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%.
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A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
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