Jennifer is purchasing a house in Albany, New York, for $275,000. She is a qualified veteran and wants to use a VA loan. The property appraises for $270,000. What is Jennifer's situation regarding VA financing?
Correct Answer
D) The VA loan is limited to the appraised value of $270,000
VA loans cannot exceed the appraised value of the property. If Jennifer wants to proceed with the purchase at $275,000, she would need to pay the $5,000 difference between the purchase price and appraised value out of pocket, in addition to any other costs not covered by the VA loan.
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Related Topics & Key Terms
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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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