33 questions from the Mortgage loan originator (SAFE) practice test.
10 questions, graded as you go, with the reason for every answer. No sign-up.
A buyer contracts to purchase a home for $310,000. The appraisal comes in at $300,000 and the loan amount is $270,000. What is the loan-to-value ratio?
Answer in percent.
90 percent
Use the lesser of the price and the appraised value: $300,000. LTV = $270,000 / $300,000 = 0.90 = 90%.
Reference: LTV on a purchase = loan amount / lesser of price or appraised value
A home is valued at $400,000. It has a first mortgage balance of $320,000 and the owner is taking a new second mortgage of $40,000. What is the combined loan-to-value ratio?
Answer in percent.
90 percent
Total liens: $320,000 + $40,000 = $360,000. CLTV = $360,000 / $400,000 = 0.90 = 90%.
Reference: CLTV = (first lien + subordinate liens) / value
A home is selling for $350,000, which is also its appraised value. The borrower is approved for a 95% loan-to-value loan. What is the loan amount?
Answer in dollars.
332500 dollars
Loan amount = value x LTV. $350,000 x 0.95 = $332,500.
Reference: Loan amount = value x LTV