Finance
When an Indiana property appraises below the contract price for an FHA loan, the FHA:
AApproves the loan based on the contract price
BLimits the loan to the appraised value — the buyer must either pay the difference or renegotiate the price✓ Correct
CRequires the buyer to pay two appraisal fees
DAutomatically denies the loan application
Explanation
FHA insures loans up to the appraised value, not the contract price. If a home appraises below the agreed purchase price, the buyer must negotiate a price reduction, pay the difference in cash, or cancel the transaction if there is an appraisal contingency.
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