Question: Consider a borrower that is approved for a standard 30-year, fully amortizing mortgage with an original balance of $250,000 and a note rate of 4.5%.

Consider a borrower that is approved for a standard 30-year, fully amortizing mortgage with an original balance of $250,000 and a note rate of 4.5%. (Standard refers to a fixed-rate mortgage contract with level payments)

If the borrower purchases a house that is appraised for $300,000, what is the borrowers loan-to-value ratio (LTV)? How does the bank use this number to decide whether to accept or deny the loan?

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