Certified Residential Appraiser Practice Exam

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Study for the Certified Residential Appraiser Exam. Use flashcards and multiple choice questions with hints and explanations. Ensure you're ready for your certification!

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

  1. 60%

  2. 68%

  3. 76%

  4. 82%

The correct answer is: 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.

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