68. A veteran has applied for a VA loan to purchase a house with a sale price of $90,000. The Department of Veterans' Affairs (VA) appraised the house at $85,000. In this situation, the veteran
Answer: A
The veteran may use the VA loan to buy the house after making a down payment of $5,000.
In this scenario, the veteran can utilize the VA loan for the purchase, but since the appraised value is lower than the sale price, a down payment of $5,000 is necessary to cover the difference.
A) may use the VA loan to buy the house after making a down payment of $5,000.
This option is correct because the veteran can use the VA loan to purchase the house, but because the sale price exceeds the appraised value by $5,000, a down payment is required to make up for that difference. The VA allows loans for the appraised value, so the veteran will need to cover the discrepancy.
B) cannot secure a VA loan because such loans are limited to a maximum of $75,000.
This option is incorrect. VA loans do not have a fixed maximum, but rather they are based on the appraised value of the property and the veteran's eligibility. The veteran can secure a loan for the appraised amount and may cover any additional costs with a down payment.
C) may buy the property with the VA loan only if the price is reduced to $85,000.
This option is also incorrect. While the appraised value is $85,000, the sale price of $90,000 can still be financed with a VA loan as long as the veteran provides a down payment to cover the difference. There is no requirement for the price to be adjusted to match the appraisal.
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 as well. While second mortgages can sometimes be part of a real estate transaction, there is no requirement that the seller must agree to this in order for the veteran to use the VA loan. The veteran can simply make a down payment to finance the purchase.
Conclusion
The correct answer is A, as it accurately reflects the veteran's ability to proceed with the purchase using a VA loan while making a necessary down payment of $5,000 due to the appraised value being lower than the sale price. All other options fail to recognize the flexibility in VA loan financing or the requirements around down payments.