David Saks: March 2011

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Real Estate Practice : Lesson 1040

                                                       #1040

For hypothetical purposes, a home is located in a low closing cost area of a state and it's selling for $400,000.

It was appraised at $410,000.

The FHA max ceiling for the loan is $390,000.

The maximum amount that the buyer would be able to receive is the FHA max of $390,000.

Is this fact true or false ?

Please take your time. The solution is poted below the wildlife photo.

 wildlife

A. False

The FHA will have a maximum loan amount available based under the FHA's LTV (loan to value) rules.

In a state that is low-closing recognized and the price of the property or it's value is over $125,000 the maximum LTV would be 97.15% of the lessor of the property's appraised value or sales price.

The selling price is lower so we multiply 97.15% times 400k and here's what it looks like :

400000 selling price
*
0.9715 or 97.15% of the selling price
=
388600 max amount available for the loan

$388,600 is less than the amount that the FHA will loan, $390,000, so the buyer will qualify.

The ceiling and FHA percentages may have changed since I wrote this entry, so please remember to check with your lender to see what the conforming rates are at this time.

 




David Saks



Time&Temp Memphis

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Comment balloon 0 commentsDavid Saks • March 21 2011 09:01PM
Real Estate Practice : Lesson 1040
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#1040 For hypothetical purposes, a home is located in a low closing cost area of a state and it's selling for $400, 000. It was appraised at $410, 000. The FHA max ceiling for… more
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Real Estate Practice : Lesson 1034
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