A Florida real estate licensee is helping a client who is a veteran apply for a VA loan. The property appraises for $185,000, but the purchase price is $190,000. How should the licensee advise the veteran buyer?
Correct Answer
B) The buyer must pay the $5,000 difference in cash or renegotiate the price
The buyer must pay the $5,000 difference in cash or renegotiate the price because VA loans cannot exceed the appraised value. Option A is incorrect because the VA will not finance above the appraised value. Option C is incorrect because the seller is not required to reduce the price, though it may be negotiated. Option D is incorrect because the transaction can proceed if the buyer pays the difference or the price is reduced.
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Related Topics & Key Terms
Key Terms:
Related Concepts
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
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