Section 4 Lesson 6 2

What best describes an appraisal in a mortgage transaction?

When is an appraisal typically used?

Why does a lender require an appraisal when a property is pledged as collateral?

What is a key purpose of appraisals in underwriting?

What is the Market Approach primarily based on?

Within what distance does the Market Approach typically study comparable sales?

What does the Market Approach do after reviewing comparable sales?

Which factor may require adjustments in the Market Approach?

What is the Income Approach used for?

When is the Cost Approach typically used?

What is the core idea behind the Cost Approach?

In the Cost Approach, the market price for the property equals:

A borrower applies for a mortgage, and the appraiser determines the property’s value by comparing it to recently sold homes of similar size and condition in the same neighborhood.

A loan file shows that an appraiser selected three comparable properties located within one mile of the subject property. Each comparable closed approximately eight months prior to the appraisal date.

A comparable property used in an appraisal contains more square footage than the subject property.

The subject property includes a basement, but none of the comparable properties include a basement.

A borrower asks when they must be informed of their right to receive a copy of the appraisal.

An appraisal is completed two days before a closed-end loan is scheduled to close.

A borrower applies for a mortgage loan with an annual percentage rate that exceeds the Average Prime Offer Rate (APOR).

A lender fails to provide the borrower with a copy of the appraisal prior to closing.