Escrow & Title
A Mississippi buyer agrees to pay $250,000 for a property. The appraisal comes in at $235,000. The lender will base the loan on:
AThe $250,000 contract price
BThe lesser of the appraised value ($235,000) or the contract price ($250,000) — here, the $235,000 appraised value✓ Correct
CAn average of the contract price and appraised value
DThe county tax-assessed value
Explanation
Lenders base the loan on the lesser of the appraised value or the purchase price. When the appraisal comes in below the contract price, the buyer must either renegotiate the price, pay the difference in cash, challenge the appraisal, or cancel the contract (if an appraisal contingency exists).
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