Question 28

Paying the $15000 difference between contract price and appraised value is acceptable to the FHA.

In the scenario where the appraisal comes in $15,000 less than the agreed amount, the FHA would allow the buyers to pay the difference between the contract price and the appraised value to complete the transaction.

A) Making sure this loan is not insured because of the lower appraisal

This option is incorrect as the FHA does not require that a loan be uninsurable due to a lower appraisal. Instead, they provide guidelines that allow for remedies, such as the borrower covering the appraisal gap, rather than disqualifying the loan altogether.

B) Giving the improvements more value and adding money to the appraisal

This choice is also incorrect because appraisals must reflect the current market value based on factual data. Inflating the appraisal value by adding improvements without actual enhancements does not align with FHA standards and can lead to compliance issues.

C) Paying the $15000 difference between contract price and appraised value

This option is correct because the FHA allows buyers to cover the difference between the appraised value and the purchase price. This allows the transaction to proceed, even when the appraisal is lower than expected, thus facilitating the purchase.

D) Allowing the buyers time to find a property closer to their approved loan amount

This option is incorrect because it does not address the immediate issue of the appraisal discrepancy. While it could be a viable alternative in some situations, it does not directly resolve the problem at hand regarding the specific property in question.

Conclusion

Paying the $15,000 difference between the contract price and the appraised value is compliant with FHA regulations and allows the transaction to move forward. The other options either misinterpret FHA policies or do not provide a feasible solution to the issue of the lower appraisal. Thus, option C is the only correct and practical choice in this context.