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Is the current appraised value or the prior purchase price used for a refinance transaction?

For refinance transactions and manual and DU underwriting methods the property value used in the calculation of the LTV ratio1 is the current appraised value.

1. As defined in the Glossary E-3-15, Glossary of Fannie Mae Terms: O, the original loan amount is the amount of the loan as indicated by the note.

Note: The LTV ratio calculation shown above may differ for certain mortgage loans. For details on these differences, see B2-1.3-05, Payoff of Installment Land Contract Requirements; B5-2-03, Manufactured Housing Underwriting Requirements; B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions; B5-3.3-01, HomeStyle Energy for Improvements on Existing Properties; B5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations; B5-5.1-02, Community Seconds Loan Eligibility; B5-5.1-04, Community Land Trusts; B5-5.2-03, Loans with Resale Restrictions: Underwriting and Collateral Considerations; and B7-1-01, Provision of Mortgage Insurance.

For complete details, see B2-1.2-01, Loan-to-Value (LTV) Ratios.

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