Real Estate Math
A Wisconsin home appraises at $375,000 but the buyer and seller agreed to a purchase price of $390,000. The lender will base the loan on:
AThe purchase price ($390,000)
BThe lesser of the purchase price or appraised value ($375,000)✓ Correct
CThe average of the two values ($382,500)
DThe appraised value plus 5%
Explanation
Lenders base the loan amount on the lesser of the purchase price or appraised value; in this case, the loan is based on $375,000, and the buyer must cover the $15,000 difference out of pocket.
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