Property Valuation
In New York, which of the following is the primary purpose of a property appraisal in a mortgage transaction?
ATo determine the property's assessed value for tax purposes
BTo establish the maximum amount the lender will use as a basis for the loan (loan-to-value calculation)✓ Correct
CTo confirm the asking price set by the seller
DTo satisfy the DOS requirement for all residential sales
Explanation
In a mortgage transaction, the appraisal establishes the property's market value, which the lender uses to calculate the loan-to-value ratio (LTV). For example, if the appraisal comes in lower than the purchase price, the lender will base the loan on the appraised value, potentially requiring a larger down payment.
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