Property Valuation
A Wyoming appraiser's final value opinion for a single-family home is $385,000. The home is under contract at $420,000. The lender is likely to:
AUse the $420,000 contract price as the value
BUse the $385,000 appraised value, requiring the buyer to make up the $35,000 difference in cash or renegotiate✓ Correct
CSplit the difference and use $402,500
DIgnore the appraisal and lend based on the contract price
Explanation
Lenders use the lower of the appraised value or purchase price to determine the loan amount. If the appraisal comes in at $385,000, the lender bases the loan on $385,000. The buyer must either bring additional cash to closing, renegotiate the price, or contest the appraisal.
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