Question

All of the following are true about residential appraisals EXCEPT:

(a) Since a borrower's available cash for closing is generally limited and the lending guidelines are rigid,
the loan originator should carefully review the appraisal for any errors.
(b) A lender will generally limit the loan to a maximum percentage of the appraised value of the property.
(c) The appraiser's final estimated market value readily allows for an increase in settlement costs up to
10% before the closing.
(d) A successful closing can be highly dependent on the appraiser's opinion of value.

Answer 1

The correct answer is (c) The appraiser's final estimated market value does not readily allow for an increase in settlement costs up to 10% before the closing.

Step-by-step explanation:

The correct answer is (c) The appraiser's final estimated market value does not readily allow for an increase in settlement costs up to 10% before the closing.

Residential appraisals are evaluations conducted by an appraiser to determine the fair market value of a property. The appraiser considers various factors such as comparable sales, property condition, and location to arrive at the final estimated market value. This value is used by lenders to determine the loan amount they are willing to provide.

While the appraisal is an important part of the loan process, it does not directly allow for an increase in settlement costs before the closing. The loan originator needs to carefully review the appraisal for any errors and ensure that the borrower's available cash for closing meets the lending guidelines.