May 6, 2013
A reader asks, “Do all homes need an inspection and an appraisal? My sister-in-law is the seller and is worried (about an) older kitchen; FHA may not give me a loan. The home is in good condition and the family already did an appraisal in order to get an asking price.”
There are two separate procedures asked about in this reader question–an appraisal is not the same thing as a home inspection, but both are important parts of the home buying process.
A home inspection is a voluntary service the borrower can and definitely SHOULD budget for when purchasing a home with any kind of mortgage whether it is an FHA, conventional, VA loan, etc. The home inspection is a more up-close look at the condition of the property and can uncover defects, poor workmanship, common issues such as roofing or plumbing problems, etc.
Again, the home inspection is NOT required by the FHA but it is definitely the best move a borrower could make when considering such a large investment.
The FHA appraisal, on the other hand IS mandatory but is NOT as in depth as a home inspection. FHA loan rules are quick to point out that the appraisal is designed only to establish a fair market value of the property and make sure it meets basic FHA minimum standards. A home that passes the appraisal process is NOT guaranteed to be free of defects, problems, etc. Borrowers should not take the appraisal as an FHA stamp of approval on the home in question.
The specific issue brought up by the reader–the age of the kitchen–is tricky. Age in and of itself is not necessarily an issue when it comes to an FHA appraisal. But the condition of that kitchen is a concern–if it is in good repair and meets local, state and/or federal building code where applicable, it may not be a problem. But each situation is different and there are many variables which could factor into a situation like this.
Borrowers should know that an FHA approved fee appraiser is required to do the job of appraising the property. Borrowers will be required to pay for an appraisal by an FHA appraiser regardless of what else may have been done with the property prior to the FHA transaction.
Do you have questions about FHA home loans? Ask us in the comments section.
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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