Finance
A Washington lender approves a loan based on an appraised value of $520,000 at 80% LTV. The purchase price is $535,000. The maximum loan amount is based on:
AThe purchase price: $535,000 × 80% = $428,000
BThe lower of appraised value or purchase price: $520,000 × 80% = $416,000✓ Correct
CThe appraised value only, regardless of the purchase price
DThe average of appraised value and purchase price
Explanation
Lenders use the lower of the appraised value or the purchase price as the basis for the loan-to-value calculation. Since the appraised value ($520,000) is lower than the purchase price ($535,000), the maximum loan = $520,000 × 80% = $416,000.
Related Washington Finance Questions
- A Washington investor completes a 1031 exchange and purchases a larger replacement property using exchange funds plus additional debt. The additional debt the investor takes on in the exchange is called:
- Washington State does NOT have which of the following taxes?
- The Truth in Lending Act (TILA) right of rescission allows a borrower to cancel a refinance mortgage on their primary residence within:
- The Federal Reserve's monetary policy affects Washington mortgage rates primarily by:
- In Washington, a 'contract for deed' (land installment contract) is considered a financing instrument rather than a sale because:
- A Washington homebuyer who qualifies for a USDA rural development loan must purchase a property:
- In Washington, which of the following is a 'secondary market' entity that purchases mortgages from primary lenders?
- Washington's Home Equity Loan Consumer Protection Act provides borrowers with additional protections for:
Practice More Washington Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Washington Quiz →