Loan Officer Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

When an appraisal value comes in lower than anticipated, it is crucial that the borrower is informed of this valuation. Transparency is fundamental in the lending process, and the borrower needs to understand how the appraisal affects their loan terms, potential down payment requirements, and overall eligibility for the loan.

Informing the borrower of the appraisal value allows for a discussion about the next steps, which could include negotiating the sale price, seeking a second appraisal, or adjusting the loan amount. This communication ensures that the borrower is fully aware of their financial situation and options moving forward.

In this context, other options do not address the required steps effectively. Denying the application outright does not accommodate for potential solutions or negotiations around the appraisal. Increasing the loan amount is not feasible since a lower appraisal typically suggests that the underlying collateral value has decreased, leading to a decision to lend less rather than more. Finally, disregarding the appraisal altogether undermines the basis for sound lending practices, which prioritize proper evaluation of property value.