Question

Alison is searching for her dream home. She believes she has found it and wonders about the potential mortgage. The property has been recently valued at $480,000 by an appraiser. Alison has a down payment of $108,000 available. What would her loan-to-value ratio be?

a) 26.5%
b) 29.0%
c) 77.5%
d) 80.0%

Answer 1

Alison's loan-to-value ratio for the home valued at $480,000 with a $108,000 down payment is 77.5%.

Step-by-step explanation:

Alison is looking to find out what her loan-to-value ratio would be for her dream home. The property she is interested in is valued at $480,000 and she has a $108,000 down payment.

To calculate the loan-to-value ratio, you subtract the down payment from the value of the home to find out the amount of the loan, then divide that amount by the home's value. So, the loan amount would be $480,000 - $108,000 = $372,000. To find the ratio, we divide the loan amount by the home's value: $372,000 / $480,000 = 0.775 or 77.5%. Therefore, the correct answer for Alison's loan-to-value ratio is (c) 77.5%.