A Texas buyer obtains an FHA loan to purchase a single-family home. The property appraises below the purchase price. Under FHA guidelines and the TREC contract, what is the buyer's BEST course of action?
Correct Answer
D) Renegotiate the price, pay the difference in cash, or terminate the contract under the FHA amendatory clause
When an FHA appraisal comes in below the purchase price, the buyer can renegotiate the price, bring the difference in cash, or terminate the contract. The TREC promulgated contract includes an FHA/VA amendatory clause allowing the buyer to terminate if the property does not appraise for at least the sales price.
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A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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