Finance
The purpose of an appraisal required by a mortgage lender is primarily to:
ASatisfy the seller that the price is fair
BProtect the lender by confirming the collateral (property) is worth at least the loan amount✓ Correct
CEstablish the property's market value for the buyer
DDetermine the property's tax assessed value
Explanation
Lenders require appraisals primarily to confirm that the property's market value supports the loan amount requested. If the borrower defaults, the lender wants assurance the collateral can be sold to recover the loan balance.
Related Arkansas Finance Questions
- A wraparound mortgage is one where:
- The term 'underwater' or 'upside down' on a mortgage means:
- The annual percentage rate (APR) on a mortgage loan is typically higher than the stated interest rate because APR:
- In what situation would a lender require 'private mortgage insurance' (PMI)?
- Which of the following loans is NOT generally subject to the rescission right under TILA?
- A lender's 'rate lock' protects the borrower from:
- Under the Equal Credit Opportunity Act (ECOA), a lender may NOT deny credit based on:
- What is the primary purpose of a mortgage or deed of trust?
Practice More Arkansas Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Arkansas Quiz →