Finance
A Maine lender 'red-flags' a loan application because the purchase price is significantly higher than the appraised value. The lender is concerned about:
AProperty tax increases
BPotential mortgage fraud inflating the purchase price✓ Correct
CTitle insurance costs
DEnvironmental contamination
Explanation
A purchase price significantly above appraised value can be a red flag for mortgage fraud, where the price is artificially inflated and the excess proceeds are diverted to the buyer or other parties (a cash-back scheme).
People Also Study
Related Maine Questions
- A Maine property with a purchase price of $400,000 and a 20% down payment is financed with a 30-year fixed mortgage at 7%. The loan amount is:Finance
- A Maine mortgage lender is required to provide the buyer with a Loan Estimate within how many business days of receiving a complete loan application?Finance
- A Maine lender requires a borrower to maintain a loan-to-value ratio no higher than 80% to avoid private mortgage insurance (PMI). On a $350,000 home, the minimum down payment would be:Finance
- In Maine, the annual percentage rate (APR) on a mortgage loan will typically be HIGHER than the note rate because:Finance
- A Maine buyer's loan requires a 20% down payment on a $340,000 purchase. Their monthly mortgage payment (P&I) at 7% for 30 years uses a factor of $6.65 per $1,000 borrowed. The monthly payment is:Real Estate Math
- A Maine home's purchase price is $375,000 with a 5% down payment. The FHA loan amount (rounding to nearest dollar) is:Real Estate Math
- A Maine property appraised at $340,000. The owner wants to list it 5% above appraisal. The listing price should be:Real Estate Math
- A Maine lender requires higher credit scores from applicants of a certain national origin. This practice is called:Fair Housing
Key Terms to Know
Title Insurance
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Study This Topic
Practice More Maine Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Maine Quiz →