Articles Tagged With: Appraiser

October 27, 2011

FHA Loans and Rental Income

There are many frequently asked questions about FHA loans in connection with rental properties. Some borrowers purchase a home with an FHA insured mortgage and live there for a while, then decide to explore their options for renting the existing home out and purchasing a new one to live in. One of the most common questions in this case has to do with qualifying income for a new FHA loan. “Can I rent my current home and use the income to qualify for a new FHA mortgage?” According to the FHA official site, there was concern that borrowers might exaggerate the amount of rental income received on the first property. To address those concerns, the FHA instituted a new policy which took effect in late 2008. “Beginning with case number | more...

October 7, 2011

Buying a Fixer-Upper With an FHA Loan

By Joe Wallace

The FHA fixer-upper loan, technically called an FHA 203(k) mortgage, is for those who want to purchase property which is in need of repair. The borrower purchases the property with the understanding that it must be renovated or repaired by the purchaser (with funds from the loan) as part of the loan agreement. Borrowers apply for this type of home loan in a different manner than for new purchase loans where the property must be in acceptable condition–the loans known as FHA 203(b) mortgages. For the fixer-upper or 203(k) loan, the borrower applies for a loan and agrees to make a down payment for at least 3.5% of the purchase price and repair costs of the property. According to FHA loan rules, the buyer finds the right home and gets | more...

July 21, 2011

FHA Loans And Appraisal Expiration Dates

By Joe Wallace

When a buyer finds a home to purchase using an FHA insured mortgage, the property must be appraised to establish the market value and make sure the home meets FHA standards before the loan can be approved. Once the home has been appraised and approved for sale, the borrower and lender can work out an agreed closing date. But FHA appraisals have an expiration date–they don’t remain valid indefinitely due to housing market changes and other variables. One common question about the appraisal process is whether the FHA allows an appraisal to be extended if it expires prior to the closing date. The short answer is that the appraisal may be extended for thirty days to allow the loan to close, “If a sales contract is signed or the borrower | more...

June 29, 2011

FHA Condo Loan Rules

By Joe Wallace

In previous blog posts, we’ve discussed the different types of FHA loans available and the various types of properties that can be purchased with an FHA insured home loan. Those properties include typical suburban houses, manufactured homes, multi-family units and condominiums. FHA condominium loans are more complex than other loans because the FHA has requirements when it comes to these loans. Borrowers can’t purchase just any condominium unit–it has to be on the FHA’s list of approved condominium projects in order to be considered for an FHA mortgage. That’s one reason why the FHA publishes a searchable list of approved condo projects on its website at https://entp.hud.gov/idapp/html/condlook.cfm. What does it take for a condominium project to be approved by the FHA so a borrower can apply for a loan to | more...

June 17, 2011

The FHA Energy Efficient Mortgage

By Joe Wallace

Making improvements in a new home to include energy efficient upgrades can save a borrower a lot of money in utility bills. Modern windows, solar powered water heaters, improved air conditioning systems and other upgrades are all within a borrower’s reach when purchasing a home with an FHA insured mortgage thanks to a feature called the Energy Efficient Mortgage. FHA Energy Efficient mortgages are for qualified borrowers buying a single family home. Under the terms of an FHA Energy Efficient Mortgage or EEM for short, energy efficient improvements must be selected by the borrower and the amount of energy savings the improvements would give every month. There must be a tangible benefit to the borrower in terms of energy efficiency and/or savings for each improvement. These savings must be calculated | more...

June 3, 2011

FHA Loans and Extensions of the Conditional Commitment

By Joe Wallace

As stated elsewhere in this blog, the appraisal process is one of the most important parts of the FHA home loan process. A borrower (and the lender) learns about the general state of the property and its fair market value thanks to the FHA appraisal, and once that process has been completed the FHA loan process can move forward and a buyer can offer a commitment to purchase the property. Due to the ever-changing nature of the housing market, FHA appraisals have an expiration date–the appraisal is not good indefinitely. What happens if for some reason the buyer delays in committing to the purchase of the home, or otherwise runs the risk of having the deal close after the appraisal has expired? Does the buyer have to pay for a | more...

May 30, 2011

FHA Minimum Property Requirements (Part Two)

By Joe Wallace

In our last blog post we discussed FHA minimum property requirements. Any home a buyer wants to make a serious offer on with an FHA insured loan must live up to the FHA’s minimum property standards or the loan cannot be approved. That doesn’t mean the home must be 100% in compliance when the appraiser comes to review the property, but it does mean that any deficiencies found must be corrected prior to the loan being closed upon. The FHA has three basic principles that guide an FHA appraiser when examining the home–it must be safe, sound, and secure. There are specific requirements in each area. For example, a home must not have stairways that aren’t equipped with hand rails, there must be no exposed wiring in the home, and | more...

May 30, 2011

FHA Loans: Minimum Property Requirements

By Joe Wallace

First-time applicants for an FHA mortgage learn soon learn about the FHA’s list of minimum property requirements, which any property bought with an FHA insured loan must live up to in order to get loan approval. The FHA has three guiding principles that inform its list of minimum property requirements, defined by what some appraisers call “the three S’s” which include safety, soundness and security. An FHA appraiser will come to inspect the property a borrower wants to buy, looking at the home to make sure it meets the FHA standards in each of these three areas. When it comes to safety, the FHA tells its appraisers, “Deficiencies or a lack of functioning components of plumbing, electrical or heating and cooling systems may create hazards that could be considered health | more...

May 18, 2011

FHA Loans: When the Appraiser Recommends Repairs/Corrections

By Joe Wallace

A frequently asked question about the FHA appraisal process is, “What are my options for satisfying repair requirements on the appraisal?” According to FHA guidelines, any repairs required on the FHA appraisal report must be “satisfied” before the loan is submitted. There are four ways to satisfy the repair requirement–showing documentation to attest that the requirements have been met once the actual work has been done, including a Compliance Inspection Report, a Fannie Mae Appraisal Update (or a Completion Report), a Mortgagee Certification, or funds placed in escrow for the purpose of satisfying the repairs at a later date. Each one of these has its own requirements and situational application. For example, a Compliance Inspection Report must, according to the FHA official site, be “prepared by an appraiser or inspector” | more...

May 3, 2011

FHA Loans, Appraisals and Refinancing

By Joe Wallace

FHA loan applicants who find a suitable home and want to buy it must wait out the required FHA appraisal process before a loan can be approved. The FHA appraiser’s job is to make sure the home meets minimum property requirements and to assign the fair market value. The fair market value establishes a baseline for the FHA loan amount and is a very important part of the process. That appraisal has an expiration date. According to FHA rules, ” Effective for all case numbers assigned on or after January 1, 2010 the validity period for all appraisals on existing, proposed, and under construction properties, including HUD REO appraisals that have an effective date of on or after April 1, 2010, will be 120 days.” That doesn’t give the borrower | more...