Answer:$1,837,500
Explanation:The LTV (Loan-to-value) ratio refers to the value signifying the difference between what is owed on a mortgage and the original mortgage value.
LTV = 75%
LTV = 0.75
Purchase price = $5,550,000
Bank will provide a loan to fund the mortgage at 75% LTV
Therefore,
Mortgage at 75% LTV equals 0.75*$5,550,000 = $4,162,500.
Therefore, The investor will pay the balance on the purchase price and the closing balance.
Closing costs = $450,000
Balance on purchase price equals
$5,550,000 - $4,162,500 = $1,387,500
Total= balance + closing costs
Total = $1,387,500 + $450,000=$1,837,500
