Nationwide Mortgage Licensing System (NMLS) Practice Exam

What is the combined loan-to-value ratio when the purchase price is $325,000, the appraisal price is $350,000, and the total mortgage amount is $260,000?

1. 78.3%

2. 80.0%

3. 86.7%

4. 92.3%

The correct answer is: 80.0%

To calculate the combined loan-to-value (CLTV) ratio, you first take the total mortgage amount and divide it by the lesser of the purchase price or the appraised value, then multiply by 100 to express it as a percentage. In this scenario, the purchase price is $325,000 and the appraisal value is $350,000. Since the purchase price is lower, you use that figure in your calculation: 1. The total mortgage amount is $260,000. 2. The CLTV formula is calculated as follows: \( \text{CLTV} = \frac{\text{Total mortgage amount}}{\text{Purchase price}} \times 100 \) Plugging in the numbers: \( \text{CLTV} = \frac{260,000}{325,000} \times 100 \) \( \text{CLTV} = 0.8 \times 100 \) \( \text{CLTV} = 80.0\% \) Thus, the combined loan-to-value ratio is 80.0%. This percentage indicates the proportion of the property's value that is secured by the mortgage, which is significant for lenders when assessing the risk of the