Real Estate Math

A home is appraised at $320,000. The lender will lend 80% of appraised value or purchase price, whichever is less. The purchase price is $330,000. What is the maximum loan amount?

A$256,000✓ Correct
B$264,000
C$320,000
D$330,000

Explanation

The lender uses the lower of appraised value ($320,000) or purchase price ($330,000), which is $320,000. Maximum loan = $320,000 x 80% = $256,000.

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