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slega [8]
3 years ago
10

Find the loan to loan ratio for a home appraised at 583,620 that the buyer will purchase for 585,000.

Business
1 answer:
adelina 88 [10]3 years ago
6 0

I assume you mean loan to value ratio. It is a simple ratio: Loan amount divided by the value of the home.

In this instance, this would be 585,000/583,620= loan to value ratio

Most banks like to see no more than a 90% loan to value ratio. This ratio helps the bank know the risk they are incurring by lending you the money to buy the home. The lower the loan to value ratio, the easier it will be for the bank to recoup their investment, therefore usually equals a lower interest rate for the buyer.

In this instance, the loan is more than the value of the home which makes this a risky investment for the bank.


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