Real Estate Math
A Delaware property is purchased for $510,000 with a 15% down payment. What is the loan-to-value ratio?
A85%✓ Correct
B15%
C75%
D90%
Explanation
Down payment = $510,000 × 15% = $76,500. Loan amount = $510,000 − $76,500 = $433,500.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Math Concepts
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