Question

All of the following statements about a section 203 (b) FHA insured mortgage loan are accurate, EXCEPT:

a. the loan may be assumed by the borrower who is qualified by the lender
b. the borrower must be allowed to prepay the loan without paying a penalty
c. HUD/FHA sets the interest rate of the loan
d. the loan must be fixed rate and have a term of 30 years or less.

Answer 1

Statement c about an FHA insured mortgage loan is inaccurate as the interest rate is determined by the lender, not HUD/FHA.

Step-by-step explanation:

All of the following statements about a Section 203(b) FHA insured mortgage loan are accurate, except for statement c which says that HUD/FHA sets the interest rate of the loan. In reality, the interest rate on an FHA mortgage loan is determined by the lender, not by HUD/FHA. The other statements, a, b, and d, are correct.