42. A couple secured a home mortgage loan from a lender who appraised the property at $92,500. If the loan-to-value ratio on the property was 85%, what was the minimum amount the couple needed for the down payment?
Answer: D
The minimum amount the couple needed for the down payment was $13,875.
To determine the minimum down payment required, we calculate 15% of the appraised property value, as the loan-to-value ratio is 85%. This means the couple needs to pay 15% upfront, which totals $13,875.
A) $6,166
This option is incorrect because it represents a figure that is too low for the required down payment. Since the loan-to-value ratio is 85%, the couple must contribute at least 15% of the appraised value, which is significantly higher than $6,166.
B) $7,862
This option also does not meet the required down payment amount. Calculating 15% of the property value yields a higher figure than $7,862, indicating that this amount is insufficient for the down payment.
C) $10,882
While this option is closer to the correct down payment, it is still too low. The down payment must be 15% of the appraised value, which calculates to $13,875, making $10,882 inadequate.
D) $13,875
This is the correct option as it accurately reflects 15% of the appraised property value of $92,500. The calculation confirms that this amount is the minimum required down payment given the loan-to-value ratio.
Conclusion
The correct answer, $13,875, is definitively right as it is derived from the accurate calculation of the down payment percentage required based on the loan-to-value ratio. All other options fail to meet the necessary minimum amount, confirming that they are incorrect.