Final answer:
The loan value of the property with a market value of $350,000 at an 80% Loan-to-Value ratio is $280,000. This calculation is essential in understanding loan amounts related to property values.
The correct option is A.
Step-by-step explanation:
The Loan-to-Value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. In this case, the asset is a property with a market value of $350,000. To calculate the loan value, we multiply the market value by the LTV ratio:
Loan Value = Market Value × LTV
Inserting the values, we get:
Loan Value = $350,000 × 0.80
So, the Loan Value is $280,000. This means that the answer is option (a) $280,000.
This information can help us understand a few examples of home equity and market value:
b. Freda's house market value is $250,000 and since she owes zero to the bank, her equity is the full market value.
c. Frank's house market value is $160,000, he paid off $20,000 of his loan, so he owes $60,000 to the bank and his equity is $100,000.
a. If a house's market value is $200,000 and the owner owes $180,000 to the bank, their equity would be $20,000.
The correct option is A.