Questions: A lender is considering whether to approve a mortgage loan on a home recently appraised at a value of 400,000. If the borrower is willing to make a down payment of 100,000, what is the loan-to-value ratio? Indicate as a whole number percentage (e.g., 40).

Solution Steps

To find the loan-to-value (LTV) ratio, we need to calculate the ratio of the loan amount to the appraised value of the property and then convert it to a percentage. The loan amount is the appraised value minus the down payment.

1. Calculate the loan amount by subtracting the down payment from the appraised value.
2. Divide the loan amount by the appraised value to get the LTV ratio.
3. Convert the ratio to a percentage by multiplying by 100.

The loan amount can be calculated by subtracting the down payment from the appraised value of the home. Thus, we have:

\[ \text{Loan Amount} = \text{Appraised Value} - \text{Down Payment} = 400,000 - 100,000 = 300,000 \]

The loan-to-value (LTV) ratio is calculated by dividing the loan amount by the appraised value and then multiplying by 100 to convert it to a percentage:

\[ \text{LTV Ratio} = \left( \frac{\text{Loan Amount}}{\text{Appraised Value}} \right) \times 100 = \left( \frac{300,000}{400,000} \right) \times 100 = 75 \]

Final Answer