Question

Loan-to-value ratios are based on?

1) appraised value
2) contract price
3) appraised value or contract price, whichever is higher
4) appraised value or contract price, whichever is lower

Answer 1

The loan-to-value (LTV) ratio is based on either the appraised value or the contract price of the property, whichever is lower.

Step-by-step explanation:

The loan-to-value (LTV) ratio is based on either the appraised value or the contract price of the property, whichever is lower.

For example, if a property is appraised at $200,000 but the contract price is $180,000, the LTV ratio would be calculated based on the contract price of $180,000.

So the correct answer to the question is option 4) appraised value or contract price, whichever is lower.