A borrower wants to finance $150,000 to renovate their existing home valued at $300,000. They have $50,000 in equity. What type of loan would be most appropriate?
Correct Answer
B) FHA 203(k) renovation loan
An FHA 203(k) renovation loan is designed specifically for renovating existing homes and allows borrowers to finance both the purchase price and renovation costs, or refinance with renovation funds included.
Why This Is the Correct Answer
An FHA 203(k) renovation loan is designed specifically for renovating existing homes and allows borrowers to finance both the purchase price and renovation costs, or refinance with renovation funds included.
More Origination Questions
A borrower has a construction-to-permanent loan with a 12-month construction phase. At month 10, construction is only 60% complete due to delays. What is the most likely outcome?
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
During a refinance transaction, the appraiser determines that significant unpermitted additions were made to the property. The appraiser wants to discuss this with the MLO before finalizing the report. What should the MLO do?
An appraiser discovers that a property has significant foundation issues that were not disclosed. The appraiser reduces the property value by $25,000 and includes detailed comments about the structural problems. The loan officer is upset because this will kill the deal. Under AIR, the loan officer:
An MLO's compensation structure includes higher payments for certain loan products. When is it acceptable to recommend these higher-compensated products?
People Also Study
Federal Mortgage-Related Laws
23% of exam
General Mortgage Knowledge
23% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam
Previous Question
A construction-to-permanent loan's construction phase experiences a 45-day delay due to weather, affecting the interest rate conversion date. The lender wants to issue a revised Loan Estimate. This delay:
Next Question
A borrower's 401(k) statement shows a current balance of $100,000. For reserve calculation purposes, what percentage of this balance can typically be counted as liquid assets?