76. A veteran has applied for a VA loan to purchase a house with a sale price of $80,000. The Department of Veterans' Affairs (VA) appraised the house at $85,000. In this situation, the veteran
Answer: C
The veteran may buy the property with the VA loan only if the price is reduced to $85,000.
In this scenario, the veteran is seeking a VA loan for a property appraised at $85,000 but listed at $80,000. To utilize the full benefits of the VA loan, the purchase price must align with the appraised value, therefore, the veteran can proceed with the loan only if the price is adjusted accordingly.
A) may use the VA to buy the house after making a down payment of $5,000.
This option is incorrect because the VA loan does not typically require a down payment, especially when the appraised value exceeds the sale price. The veteran can finance the full appraised value without needing to provide a down payment if the loan is approved.
B) cannot secure a VA loan because such loans are limited to a maximum of $75,000.
This statement is also incorrect. VA loans do not have a blanket maximum limit of $75,000; rather, they are based on the veteran’s entitlement and the appraised value of the property. In this case, the appraised value of $85,000 would allow for a VA loan to be issued.
C) may buy the property with the VA loan only if the price is reduced to $85,000.
This option is correct. Since the property is appraised at $85,000, the veteran must ensure that the purchase price matches the appraised value to use the VA loan effectively. A discrepancy between the sale price and appraised value can complicate loan approval.
D) may buy the property with the VA loan only if the seller agrees to take back a second mortgage for $5,000.
This option is incorrect because it introduces unnecessary complexity to the transaction. The veteran should not be required to negotiate a second mortgage to cover a down payment, especially when the focus should be on aligning the sale price with the appraised value to facilitate the VA loan.
Conclusion
The correct answer is C, as it aligns with the VA loan requirements that the purchase price must reflect the appraised value. Options A and B misinterpret the loan structure, while D unnecessarily complicates the financing process. Thus, ensuring the sale price matches the appraised value is crucial for the veteran to successfully utilize the VA loan benefits.