Question 17

The property has been appraised for value.

When home buyers purchase a $75,000 property with an FHA-insured mortgage, they are assured that the property has been appraised for value, ensuring it meets the required standards for financing.

A) The property is not subject to eminent domain.

This statement is incorrect as there is no assurance given by an FHA-insured mortgage regarding eminent domain. Properties can still be subject to government acquisition under eminent domain regardless of the mortgage type.

B) The neighborhood values will increase.

This option is also incorrect. FHA-insured mortgages do not guarantee that neighborhood values will increase, as property values are influenced by various external factors that cannot be predicted or assured by the mortgage itself.

C) A down payment is not required.

This statement is misleading. While FHA loans may allow for lower down payments, they do not eliminate the requirement for a down payment entirely. Buyers are generally required to make a down payment, albeit a lower percentage compared to conventional loans.

D) The property has been appraised for value.

This statement is correct as FHA loans require an appraisal to ensure that the property meets certain value and condition standards. This appraisal protects both the lender and the borrower by confirming that the property is worth the amount being financed.

Conclusion

The assurance that the property has been appraised for value is a fundamental aspect of FHA-insured mortgages, thereby providing security to the buyers. The other options fail to reflect the guarantees provided by such mortgages, making them incorrect in this context. Thus, option D stands out as the definitive correct choice.