Question

How is the ratio between the value of the property and the amount of the mortgage typically calculated?

A) Divide the value of the property by the loan amount
B) Divide the loan amount by the value of the property
C) Subtract the loan amount from the value of the property
D) Multiply the loan amount by the value of the property

Answer 1

The ratio between the value of the property and the amount of the mortgage is typically calculated by dividing the value of the property by the loan amount.

Step-by-step explanation:

The ratio between the value of the property and the amount of the mortgage is typically calculated by dividing the value of the property by the loan amount. This calculation helps determine the percentage of the property's value that is covered by the mortgage. For example, if the value of the property is $200,000 and the loan amount is $160,000, the ratio would be 200,000/160,000 = 1.25. This means that the mortgage covers 125% of the property's value.