Question

You apply for a home-equity loan. You have a first mortgage, with a current balance of $143,200. Based on an appraisal of $270,000 and a 75% LTV, what is the maximum line of credit you can get?

Answer 1

Current Mortgage Balance = $143,200

Formula for Loan-to Value(LTV) Ratio:-

LTV Ratio = Mortgage Amount/Property Appraised Value

0.75 = Mortgage Amount/$270,000

Mortgage Amount = $202,500

As you have already Mortgage balance of $143,200, the maximum line of credit you can get on Home Equity Loan

= Mortgage Amount - Current Mortgage Balance

= $202,500 - $143,200

the maximum line of credit you can get on Home Equity Loan = $59,300

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