Certified Residential Appraiser Practice Exam

Question: 1 / 725

For a home purchase of $125,000 with a $95,000 loan, what would be the loan-to-value ratio (LTV)?

60%

68%

76%

To calculate the loan-to-value ratio (LTV), the formula used is:

LTV = (Loan Amount / Purchase Price) × 100%

In this scenario, the loan amount is $95,000 and the purchase price of the home is $125,000.

Using the formula, we substitute the values:

LTV = ($95,000 / $125,000) × 100%

LTV = 0.76 × 100%

LTV = 76%

This result indicates that the loan amount is 76% of the property's purchase price, which aligns perfectly with option C. The LTV ratio is an important metric in lending as it helps lenders assess risk — a higher LTV may indicate higher risk because it implies less equity in the property.

Get further explanation with Examzify DeepDiveBeta

82%

Next Question

Report this question

Download Certified Residential Appraiser Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy