Finance
A Minnesota property appraiser values a home at $320,000. The lender offers 80% LTV. If the purchase price is $315,000, what is the maximum loan amount?
A$256,000
B$252,000✓ Correct
C$270,000
D$246,000
Explanation
Lenders use the lesser of appraised value or purchase price as the base for LTV calculation. Lesser value = $315,000 (purchase price).
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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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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.
Math Concepts
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