Real Estate Math
A Rhode Island homeowner wants to refinance. Their home is worth $480,000 and they owe $300,000. What is the maximum they can borrow on a refinance at 80% LTV?
A$280,000
B$330,000
C$384,000✓ Correct
D$396,000
Explanation
Maximum loan at 80% LTV: $480,000 x 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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Math Concepts
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