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
A veteran may buy the property with the VA loan only if the price is reduced to $85,000.
In this scenario, the veteran can utilize the VA loan for the purchase of the house, but the loan amount cannot exceed the appraised value of $85,000. Therefore, for the veteran to proceed with the loan without any additional down payment, the sale price of the house must be reduced to match the appraised value.
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 require a down payment, and since the appraised value is higher than the sale price, a down payment would not be necessary unless the sale price exceeds the appraised value.
B) cannot secure a VA loan because such loans are limited to a maximum of $75,000.
This statement is incorrect as it misrepresents the VA loan limit. The VA loan limit varies by county and is not universally set at $75,000. In this case, since the appraised value is $85,000, the veteran is eligible for a VA loan up to that amount.
C) may buy the property with the VA loan only if the price is reduced to $85,000.
This option is correct because the veteran can only secure a VA loan for the appraised value of $85,000. If the sale price remains at $80,000, it is below the appraised value, allowing for the loan to be secured, but for the loan to proceed without complications regarding value, the sale price must be equal to the appraised value.
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. There is no requirement for a second mortgage in this context, as the VA loan can cover the appraised value of the home. The veteran can purchase the property without needing any additional financing from the seller if the sale price is adjusted accordingly.
Conclusion
The correct answer, option C, is justified as the veteran can only utilize the VA loan if the sale price is aligned with the appraised value of $85,000. Options A, B, and D fail to recognize the conditions of VA loans regarding appraised values and down payment requirements, thus making them incorrect in this context.