Finance
A Minnesota property is appraised at $280,000 but the purchase price is $295,000. The lender will base the loan on:
AThe purchase price of $295,000
BThe appraised value of $280,000✓ Correct
CThe average of purchase price and appraised value
DWhichever is higher
Explanation
Lenders base the loan on the lesser of the appraised value or the purchase price. Since the appraised value ($280,000) is less than the purchase price, the lender uses $280,000 as the basis for the loan. The buyer must cover the $15,000 gap plus any required down payment from their own funds.
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