Real Estate Math
A Hawaii house appraises for $550,000, but the buyer made an offer for $570,000. The lender will base the loan amount on:
AA. $570,000 (the purchase price)
BB. $550,000 (the appraised value, the lower of the two)✓ Correct
CC. The average of $560,000
DD. $580,000 to include closing costs
Explanation
Lenders base the loan amount on the lesser of the purchase price or the appraised value. If the property appraises low, the buyer must pay the difference from their own funds.
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