Question 18

Paying the $15,000 difference between contract price and appraised value is acceptable to the FHA.

In cases where an appraisal comes in lower than the agreed purchase price, FHA guidelines allow the buyer to cover the difference in order to proceed with the loan. This means the couple can pay the $15,000 difference directly to ensure the loan can be insured.

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

This option is incorrect because the FHA does not require that loans be uninsurable solely due to a lower appraisal. Instead, there are provisions to address appraisal discrepancies, allowing buyers to finance the difference if they choose to do so.

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

This option is also incorrect as it misrepresents the appraisal process. Appraisers are required to provide an objective assessment based on market conditions and property analysis, and merely adding value for improvements does not align with FHA standards.

C) paying the $15,000 difference between contract price and appraised value

This option is correct as it aligns with FHA guidelines that allow buyers to cover the difference between the appraised value and the contract price. This practice enables the transaction to proceed while ensuring the lender's investment is secured.

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 at hand. While finding a new property might be a long-term solution, it does not resolve the current appraisal issue nor align with FHA policies concerning low appraisals.

Conclusion

The correct answer is C, as it directly adheres to FHA regulations that permit buyers to pay the difference between the appraised and contracted price. Other options fail to meet FHA guidelines or do not effectively resolve the appraisal issue, highlighting the importance of understanding financing options in real estate transactions.