Real Estate Math
A home in Carmel, Indiana appraised for $480,000. The lender requires a maximum 80% LTV. What is the maximum loan amount?
A$360,000
B$384,000✓ Correct
C$400,000
D$432,000
Explanation
Maximum loan = $480,000 × 0.80 = $384,000.
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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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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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