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Let’s assume that you want to buy a house that is appraised at $372,000 for $373,000....

Let’s assume that you want to buy a house that is appraised at $372,000 for $373,000. If the bank requires a maximum Loan-to-Value Ratio of 0.75, how much equity do you need to purchase this house?

A. 98,000

B. 95,000

C. 94,000

D. 93,250

E. There is not enough information to answer this question.

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Answer #1

Loan to value ratio = Amount of loan÷Value to the asset at its appraised value

0.75 = amount of loan÷ $373,000
Amount of loan = 279,750.

equity you need to purchase this house= Value to asset at its appraised value-amount of loan
= $373,000-$279,750
= $93,250

Answer. D. $93,250

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