Free Pennsylvania Real Estate Practice Exam Practice Question
Which of the following statements about an FHA loan is CORRECT?
Correct Answer: B
Rationale: Option B accurately describes the role of the FHA in the lending process. FHA-approved lenders provide the funds to borrowers, while the FHA insures the loan, protecting lenders against losses.
Option A is incorrect because the FHA does not guarantee the absence of physical defects; it primarily focuses on insuring loans rather than inspecting properties.
Option C misrepresents the FHA's role, as it does not lend money directly, and closing costs are typically negotiated between buyers and sellers, not solely covered by the seller.
Option D is misleading; FHA insurance does not pay off loans upon the borrower's death; it focuses on insuring loans against default.
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