Finance
An Alaska property sells for $500,000. The buyer gets a loan for $400,000. The lender requires an appraisal. The appraiser values the property at $480,000. What is the maximum loan the lender will approve at 80% LTV based on appraised value?
A$320,000
B$384,000✓ Correct
C$400,000
D$480,000
Explanation
Lenders base LTV on the LOWER of appraised value or purchase price. Appraised value ($480,000) < purchase price ($500,000), so the lender uses $480,000. Maximum loan at 80% LTV = $480,000 × 0.80 = $384,000. The buyer would need to cover the difference.
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