Articles Tagged With: FHA Appraisal Rules

March 1, 2018

FHA Appraisal Rules And Model Building Codes

When it comes to FHA appraisal rules, it’s easy to forget that the appraisal requirements and minimum property standards set by the FHA are not the only regulations which must be followed. State law, and local building codes also apply. The FHA/HUD official site includes instructions to participating lenders and appraisers about model building codes and how FHA mortgage appraisal rules work together in the FHA loan transaction process. According to FHA.gov, “The Minimum Property Standards (MPS) establish certain minimum standards for buildings constructed under HUD housing programs. This includes new single family homes, multi-family housing and health care type facilities”. At one time there were a variety of minimum property standards for different types of properties. But since the era of the 1980s, the Department of Housing and Urban | more...

February 15, 2018

The Truth About FHA Appraisals

By Joe Wallace

There are some borrowers who don’t know the truth about FHA appraisals. They mistake the appraisal process for something it is not and make the wrong assumptions about the home they are purchasing based on the outcome of the FHA appraisal. This has the potential to create major problems down the line, because relying on the appraisal alone (instead of paying for the optional but critically important home inspection) doesn’t give the borrower all the information she or he needs to make an informed decision about purchasing a property. There’s an old maxim about appraisals; basically that they are a tool for the lender, not the borrower. The FHA appraisal process is not intended to be a stamp of approval on the home implying that it is fully defect-free. Borrowers | more...

February 14, 2018

FHA Appraisal Rules When Switching Lenders

By Bruce Reichstein

Do you know what the FHA loan appraisal rules are for switching lenders? It’s true that not all borrowers will experience a situation where a change in lenders is needed, but a borrower is free to do so under FHA loan rules. In such cases an appraisal transfer may be required, and in others the new lender may wish to order a second appraisal. Is the new lender allowed to do so? According to HUD 4000.1, the FHA loan handbook, the lender is prevented from ordering a second appraisal (new lender or not) just to get a different result from the process. But there are circumstances where the new appraisal might be necessary and permitted. HUD 4000.1 states that for the original lender, “A second appraisal may only be ordered | more...

February 14, 2018

Can I Get A Second FHA Appraisal If I Don’t Agree With The First One?

By Joe Wallace

A common question some newcomers to the home buying process ask; “Can I get a second FHA appraisal if I don’t agree with the first one?” FHA loan rules anticipate situations like these. Some borrowers or sellers don’t share the opinion of the appraiser for a variety of reasons; some may simply wish to have the home appraised again to see if the results are more advantageous. But FHA loan rules don’t allow a second appraisal simply for the purpose of getting a different result. HUD 4000.1, the FHA loan handbook, instructs the lender on how she may proceed with a second FHA appraisal request. For example, page 128 of HUD 4000.1 states clearly, “The Mortgagee is prohibited from ordering an additional appraisal to achieve an increase in value for | more...

What Credit Score Is Needed For An FHA Mortgage?

February 9, 2018

Can I Request An Appraisal Update For An FHA Mortgage?

By Bruce Reichstein

Can I request an appraisal update for an FHA loan? The FHA appraisal expiration issue is one that won’t affect all borrowers, but when it does become an issue, it’s good to know what the FHA loan rules are; in general FHA appraisals have a 120 day validity window, with an option for a 30-day extension. The 30-day extension is, as we discussed in a previous blog post, addressed in the FHA loan handbook as follows: “The 120 Day validity period for an appraisal (see Ordering Appraisals) may be extended for 30 Days at the option of the Mortgagee if (1) the Mortgagee approved the Borrower or HUD issued the Firm Commitment before the expiration of the original appraisal; or (2) the Borrower signed a valid sales contract prior to | more...

February 8, 2018

When Does My FHA Appraisal Expire?

By Joe Wallace

When does my FHA appraisal expire? It’s a question that not all borrowers find themselves of need of answering, but there are cases where there may be unexpected delays trying to get to loan approval or a closing date. Some borrowers get nervous about issues like appraisal expiration. Should they be? General FHA Loan Rules Governing The Age Of Loan Documents In general, there’s a basic expiration for FHA loan documents except for “evergeen” paperwork submitted as part of the loan package such as supporting documentation for divorces, alimony payments, tax documents, and related information. HUD 4000.1 says of the general age of loan documents, “Documents used in the origination and underwriting of a Mortgage may not be more than 120 Days old at the Disbursement Date. Documents whose validity | more...

January 29, 2018

What You Need To Know About FHA Home Loan Appraisals

By Joe Wallace

What you need to know about FHA home loan appraisals includes the difference between an appraisal and an inspection, and what the appraiser looks for when spotting defective conditions and why. The most important thing to know overall about an FHA home loan appraisal is that the appraisal is not a tool for the borrower to use to determine whether the house is suitable; the appraisal is a tool for the lender to establish the fair market value of the home. Do not rely on the appraisal to tell you the home is in acceptable condition, it was not designed to do this no matter how it may seem from the appraisal report. The borrower-arranged home inspection is the best way to “test drive” a home to see if it | more...

January 11, 2018

FHA Condo Loans And Site Condominiums

By Joe Wallace

FHA condo loans are available for both condo units and site condominiums. But what’s the difference? Many are surprised to learn that an FHA home loan is available for condo units, but are sometimes disappointed that the FHA condo loan requirements include being on or added to an FHA-approved condo project list. Borrowers must work with their participating FHA lenders to have condo projects not on that list added to it, but the requirements are different depending on whether you’re looking at a condo unit or a property classified as a “site condominium”. What’s the difference? FHA loan rules in HUD 4000.1 require a condo project to be added to the FHA approved list if it is not already when the borrower chooses to buy. FHA loan rules were created | more...

January 11, 2018

Does The Age Of The Property Affect An FHA Home Loan?

By Bruce Reichstein

Does the age of the property affect an FHA mortgage loan transaction? Not all properties are brand new, and in cases where existing construction homes or other property types are being considered for an FHA home loan, age can and often is a factor. Why is this? It depends on the type of home you wish to buy. FHA Home Loans For Mobile Homes, Manufactured Homes FHA home loan rules for mobile homes and manufactured homes carry a requirement that the property be of a certain maximum age. According to HUD 4000.1, the lender is tasked with insuring that the mobile home was built on or after June 15, 1976, “as evidenced by an affixed HUD Certification Label in accordance with 24 CFR § 3280.11”. The rules in this section | more...

December 28, 2017

FHA Rehab Loans and Appraisal Requirements

By Bruce Reichstein

FHA rehab loans have different appraisal requirements than FHA “forward” mortgages used to simply purchase an existing-construction property. Because the borrower is applying for a home loan to buy property that (likely) does not meet FHA minimum standards or state/local building code, the lender is required to determine both the existing condition of the home and the “after completion” version of it. What do FHA loan rules say about the appraisal process for this type of home loan transaction? Today we’re examining the rules for the FHA 203(k) rehab loan. We’ll cover rehab loan rules for properties in federally declared disaster areas in a separate blog post. FHA Appraisal Rules For 203(k) Rehab Loans As mentioned above, FHA loan handbook (HUD 4000.1) requires the lender to determine the value the | more...