Question

Phil paid $2,500 in discount fees on his new loan. If the discount fees were 1.50% and Phil received a 90% LTV loan, what was the appraised value of the property?

(a) $150,000.00
(b) $186,186.17
(c) $149,999.99
(d) $185,185.17

Answer 1

The appraised value of the property is found by first calculating the loan amount from the discount fees and then dividing this amount by LTV ratio. The correct appraised value of Phil's property comes out to be $185,185.17, making the answer (d).

Step-by-step explanation:

To find the appraised value of the property on which Phil received a 90% LTV (Loan-to-Value) loan with $2,500 paid in discount fees at 1.50%, we must follow a series of steps. First, we understand that the discount fees are a percentage of the loan amount, so we can calculate the loan amount by dividing the discount fees by the rate. Using the formula:

Loan Amount = Discount Fees / Discount Rate

We get:

Loan Amount = $2,500 / 0.015

Loan Amount = $166,666.67

Since the LTV ratio is 90%, the loan amount represents 90% of the appraised property value, so to find the total value, we divide the loan amount by 0.9:

Appraised Value = Loan Amount / 0.9

Appraised Value = $166,666.67 / 0.9

Appraised Value = $185,185.19, which means the correct answer is (d) $185,185.17.