Escrow & Title
When a Wisconsin buyer pays above the appraised value for a home being financed, the lender typically lends based on:
AThe purchase price, regardless of appraisal
BThe lower of the purchase price or appraised value✓ Correct
CThe average of appraised and purchase price
DThe appraised value plus 5%
Explanation
Lenders base their loan on the lesser of the purchase price or appraised value; if the buyer pays above appraisal, they must cover the gap with additional down payment.
People Also Study
Related Wisconsin Questions
- A Wisconsin buyer purchases a home for $350,000 with a 20% down payment. What is the loan amount?Finance
- A Wisconsin veteran purchases a home using a VA loan. The required down payment is:Finance
- A Wisconsin homebuyer receives a gift of $20,000 from their parents for a down payment. The lender will typically require a:Finance
- A Wisconsin buyer obtains an 80% LTV conventional loan on a $300,000 home. What is the down payment?Finance
- A Wisconsin lender who requires a larger down payment from buyers in certain neighborhoods based on race is engaging in:Fair Housing
- A Wisconsin property is listed at $449,000 and appraised at $445,000. A lender will loan 80% of the appraised value. What is the minimum down payment if the buyer pays the listing price?Real Estate Math
- A Wisconsin home costs $325,000. The buyer makes a 20% down payment and pays 1.5 discount points. How much does the buyer pay in discount points?Real Estate Math
- A Wisconsin property was appraised at $375,000. The buyer offers 98% of appraised value. The transfer tax ($3/$1,000) will be based on the sale price. What is the transfer tax?Real Estate Math
Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Closing CostsFees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
Math Concepts
Study This Topic
Practice More Wisconsin Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Wisconsin Quiz →