A Home Sells for $150,000 but Is Appraised by a Lender

question 20

True/False

A home sells for $150,000 but is appraised by a lender for $145,000. The lender will typically apply the loan-to-value ratio to the larger of the two numbers.

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Definitions:

Accrual Basis Accounting

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Cash Basis Accounting

An accounting method that records revenues and expenses when cash is actually received or paid, rather than at the time they are incurred.

Rental Payments

Periodic payments made by a lessee to a lessor for the use of a property, space, or equipment.

Landlord

An individual or entity that owns real estate which is rented or leased to another party, known as a tenant.