CLTV example: First loan $100,000, second loan $50,000, appraised value $170,000. What is the CLTV?

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Multiple Choice

CLTV example: First loan $100,000, second loan $50,000, appraised value $170,000. What is the CLTV?

Explanation:
CLTV shows how much total debt secured by the property compares to its value. Add up all existing liens on the property: 100,000 plus 50,000 equals 150,000. Then divide by the appraised value: 150,000 divided by 170,000 equals 0.882, or 88.2%. Therefore, the CLTV is 88.2%. This uses the appraised value as the denominator; if the purchase price were lower than the appraised value, some lenders would use the lower of the two.

CLTV shows how much total debt secured by the property compares to its value. Add up all existing liens on the property: 100,000 plus 50,000 equals 150,000. Then divide by the appraised value: 150,000 divided by 170,000 equals 0.882, or 88.2%. Therefore, the CLTV is 88.2%. This uses the appraised value as the denominator; if the purchase price were lower than the appraised value, some lenders would use the lower of the two.

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