A woman bought a home. The asking price for the home was $585,000; the woman offered $565,000 and the seller accepted. The appraised value of the home is $560,000. The woman plans to pay $94,600 in cash and take out a mortgage for the remainder. What is the LTV for this property

Question

Blaze Cantu

Business

25 July, 00:30

A woman bought a home. The asking price for the home was $585,000; the woman offered $565,000 and the seller accepted. The appraised value of the home is $560,000. The woman plans to pay $94,600 in cash and take out a mortgage for the remainder. What is the LTV for this property

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Answers (1)

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Ryder Shaw · Answer 1

The multiple choices are as follows:

A: 82%

B: 83%

C: 84%

D: 85%

The correct option is C, 84%

Explanation:

Loan-to-Value ratio (LTV) = loan amount/appraised value of the property

the price paid for the property was $565,000, out of which the buyer paid $94,600 from her pockets and borrowed the remainder, the remainder that was borrowed is computed thus:

amount borrowed=sales value-cash

=$565,000-$94,600=$470,400

The appraised value of the property is $560,000

LTV=$470,400/$560,000=0.84

The property loan to value ratio is 84%