A Texas buyer uses an FHA loan and wants to include the option period in the TREC One to Four Family Residential Contract. Which of the following correctly describes how the FHA amendatory clause interacts with the option period?
Correct Answer
B) They serve different purposes — the option period allows unrestricted termination, while the amendatory clause protects the buyer if the appraised value is below the sales price
The TREC option period and FHA amendatory clause serve separate functions. The option period (unique to Texas) allows the buyer to terminate for any reason in exchange for a non-refundable option fee. The FHA amendatory clause protects the buyer specifically when the appraisal is below 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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