June 14, 2018
The FHA loan appraisal process is potentially confusing to a new borrower. If you are serious about purchasing a specific property with an FHA mortgage, the appraisal is an important step in the loan approval portion of your house hunting experience because it tells the lender whether the property is suitable for an FHA mortgage.
What Is The FHA Appraisal And What Does It Do?
FHA appraisals are performed when you want to purchase a specific property with a home loan. The appraisal is not done for a house you are “just looking” at; this process is reserved for the home you specifically want to buy.
An FHA approved appraiser, assigned by your lender, will come to the property and give it a general review. This process is not as complete or intensive as a home inspection (which is something the borrower must pay for and arrange) and should NOT be taken as a stamp of approval by the FHA or a promise that the home is free of defects.
Why Isn’t The Appraisal A Guarantee Of A Home’s Condition?
An old industry saying among lenders is, “Appraisals are for lenders, inspections are for borrowers”. This means that the appraisal is a tool the lender uses for specific ends in the home loan process and definitely NOT used as a tool for consumer protection. With that in mind, all borrowers should plan on paying for the optional home inspection.
Your appraiser will not perform a home inspection for you at the same time the appraisal occurs. The appraisal is meant only to determine the fair market value of the home and to insure the property meets FHA minimum requirements and nothing more.
Will The Appraiser Go Onto The Roof, Or Other Hard-To-Access Parts Of The Home?
Not necessarily. The appraiser will not specifically attempt to determine the remaining life of the roof, mechanical systems of the home such as HVAC or other features. The appraiser’s job is not to protect the consumer, but rather to assess the as-is condition of the home in a very general way.
What If I Don’t Agree With The Appraised Value Of The Home?
The appraised value of the home is calculated using the condition of the property itself but also may be compared to similar homes in that market and given a value based on those properties as “comparable”.
Borrowers or sellers who don’t agree with the appraisal cannot request a “do-over” simply to get a better dollar value result on the property. If there is a question of negligence, incompetence, or errors, borrowers should approach the lender with such concerns, and/or approach the FHA directly.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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