62. A couple's offer was accepted out of 12 other offers, which was surprising because they were only putting 3.5% down with an FHA insured loan. If the appraisal comes in $15,000 less than the agreed amount, which of the following would be acceptable to the FHA?
Answer: C
Paying the $15,000 difference between contract price and appraised value is acceptable to the FHA.
In the context of an FHA insured loan, if the appraisal comes in lower than the contract price, one acceptable option is for the buyers to cover the difference in cash. This ensures that the loan amount remains within the limits set by the FHA guidelines while allowing the purchase to proceed.
A) Making sure this loan is not insured because of the lower appraisal
This option is incorrect as it suggests that the loan should not be insured due to the appraisal issue. However, FHA loans can still be insured even if there is a lower appraisal, provided that other conditions are met, such as the buyer's ability to cover the difference.
B) Giving the improvements more value and adding money to the appraisal
This option is not acceptable because appraisals are based on objective assessments of property value, including comparable sales, condition, and market trends. Simply adding value for improvements without substantiated evidence would not be compliant with FHA regulations.
C) Paying the $15,000 difference between contract price and appraised value
This option is correct as it allows the buyers to cover the gap between the appraised value and the contract price. The FHA accepts this approach as it helps ensure that the loan amount does not exceed the appraised value, which is a requirement for FHA financing.
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 situation regarding the current property under contract. While finding another property may be a potential solution, it does not resolve the current appraisal issue and the buyers’ desire to proceed with the home they have selected.
Conclusion
The correct answer, paying the $15,000 difference, directly aligns with FHA guidelines, allowing the transaction to proceed despite the lower appraisal. The other options fail to meet FHA requirements either by avoiding the issue or suggesting non-compliant solutions. Thus, option C is the only viable choice in this scenario.