Real Estate Math
A Florida investor purchases a property using a 70% LTV loan. The property appraised at $500,000. What is the loan amount?
A$350,000
B$150,000✓ Correct
C$500,000
D$250,000
Explanation
Loan amount = Property Value × LTV Ratio = $500,000 × 0.70 = $350,000.
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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.
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.
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.
Math Concepts
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