Articles Tagged With: FHA Appraisals

January 25, 2017

Appraisal Questions: Bricks

A reader asked a question about the FHA appraisal process in our comments section recently; “I am currently selling my house. The buyer is getting a FHA loan.” “The appraiser asked us to repair any broken brick on the outside of the house. My husband scraped off the parts of the bricks falling apart and filled each hole with mortar and painted it as close to the brick as he could. Will this be an acceptable fix according to the appraiser?” When an FHA appraiser requires corrections as a condition of loan approval, borrowers will likely have to pay for an additional compliance inspection, which allows the appraiser to verify that the corrections were made to the satisfaction of FHA minimum standards. Whether or not a certain correction or repair | more...

January 10, 2017

FHA Appraisal Update: A Reader Question

By Joe Wallace

What’s the difference between an FHA appraisal update and ordering a second appraisal? That’s an important point when it comes to answering the reader question that came in via our comments section this week: “My question is this: Can a lender order a new appraisal on a property that has already been assigned an FHA case number (previous buyer offer fell thru)? Appraisal is less than 120 days old. Since the initial appraisal the seller has installed a new roof, WDO repairs and other minor repairs. Would this give the new lender a reason to order a new appraisal?” FHA loan rules in HUD 4000.1 make a distinction between an FHA appraisal update and a “second appraisal”. HUD 4000.1 says the following about a second lender ordering a new appraisal | more...

January 4, 2017

FHA Appraisal Rules: Zoning, Non-Residential Use

By Joe Wallace

The FHA Single Family Home Loan Rulebook, HUD 4000.1, includes instructions regarding FHA appraisal procedures. There are rules governing a wide range of issues, conditions, and problems, but FHA appraisal rules don’t address each and every issue. Some areas are left to state/local building code, federal health guidelines, or other regulations. Other issues are clearly defined in the appraisal section and are non-negotiable (with certain exceptions that may apply) except where the law (local, state, or federal) may have a say. Some of these clearly defined areas include zoning and the non-residential use of a property to be purchased with an FHA mortgage. HUD 4000.1 has some specific things to say about both. When it comes to the non-residential nature or use of the property, FHA appraisal rules are clear | more...

December 12, 2016

Appraisal Issues: Wood Floors

By Joe Wallace

FHA appraisal topics have been very popular recently in our comments section. One reader asks, “I’m going to view a home that has a plywood floor in the basement. not sure if that will be acceptable by FHA guidelines. Is there somewhere I can access a list of what is unacceptable?” FHA appraisal requirements for forward and “reverse” mortgages (HECM loans) are found in HUD 4000.1, starting on Page 465. This handbook can be downloaded from the FHA official site at www.fha.gov. A quick scan of HUD 4000.1 doesn’t reveal a specific requirement for the nature or construction of wood flooring in basement areas, but that leads us to a very important point where issues like these are concerned. FHA appraisal rules are NOT the only guidelines that must be | more...

November 25, 2016

FHA Appraisal Fees in 2017

By Joe Wallace

If you are considering an FHA home loan in 2017, the FHA appraisal fees and other appraisal issues are likely something you’ll be thinking about soon. Planning and budgeting for a home loan includes anticipating FHA appraisal fees, hazard insurance, and required closing costs that won’t be included in the loan amount. Do you know how much to save up for such expenses? We get many questions about FHA appraisals in our comments section. One common question has to do with the specific amount of the fee and how such fees are determined. We are also asked about refunds of the appraisal cost if the home is ultimately declared unsuitable for an FHA mortgage, or if the borrower chooses not to purchase the property for some reason. The key to | more...

November 18, 2016

FHA Appraisal Rules: A Reader Question

By Joe Wallace

A reader asks, “Does the ‘no exposed wiring’ rule apply to an unfinished utility closet that has the furnace and water heater inside it? This is merely a smaller utility closet space that was never finished as it was never meant for any type of living area.” FHA loan appraisal rules in HUD 4000.1 include a set of instructions for the appraisal. Those instructions include a section that specifically addresses the electrical system of the home. In general this section tells the lender and appraiser about defective conditions which must be reported, including a variety of issues such as an electrical system that is not adequate to support the entire property. Those instructions also include the following: “The Appraiser must examine the electrical system to ensure that there is no | more...

October 27, 2016

FHA Appraisal Rules: The Roof

By Joe Wallace

FHA appraisal rules cover a variety of aspects of the home. FHA appraisal requirements are found in HUD 40001., and include guidelines for electrical systems, plumbing, paint, and also requirements for the roof. FHA appraisers perform a review of the property to make sure it meets minimum standards, but the appraisal is NOT a home inspection, a guarantee that a home is defect-free, etc. Borrowers should never rely on the FHA appraisal as a stamp of approval or anything similar to a home inspection. Your appraisal fee does not cover this inspection, but the inspection is an investment that could save you thousands of dollars later on. When it comes to FHA appraisal rules for the roof, HUD 4000.1 begins on page 488, stating, “The Appraiser must notify the Mortgagee | more...

Buying A Fixer-Upper With An FHA 203(k) Rehab Loan

October 26, 2016

FHA Appraisal Guidelines: Heating and Plumbing

By Joe Wallace

FHA appraisal rules are found in HUD 4000.1, which is the rule book for all FHA single family mortgage loans, refinancing, and reverse mortgages. There are some specific instructions where aspects of the appraisal are concerned, including systems found in the home such as heating, cooling, and plumbing. For example, where heating the home is concerned, FHA loan rules begin by stating, “The Appraiser must examine the heating system to determine if it is adequate for healthful and comfortable living conditions, regardless of design, fuel or heat source.” There may be situations where the heating system installed is not quite up to the task of managing the entire residence. Rules for the FHA appraisal address this directly: “The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS | more...

FHA Loans And Natural Disasters: What You Should Know

October 24, 2016

Mold Standards: An FHA Loan Question

By Joe Wallace

A reader asks, “Does the EPA or the FHA have the responsibility for setting the TLVs for mold spores in the air? What if the mold count is higher outside than inside?” The FHA does not set or regulate such health issues, deferring instead to federal, state, or local authority where applicable. According to the Environmental Protection Agency’s official site, we learn the following about mold as it relates to exposure in buildings (in general): “Is sampling for mold needed? In most cases, if visible mold growth is present, sampling is unnecessary. Since no EPA or other federal limits have been set for mold or mold spores, sampling cannot be used to check a building’s compliance with federal mold standards. Surface sampling may be useful to determine if an area | more...

October 24, 2016

Appraisal Rules For FHA Mortgages, Reverse Mortgages

By Joe Wallace

FHA home loans require an appraisal, which is designed to determine the fair market value of the home, but also to insure the property meets FHA minimum standards. While the appraisal must not be considered an inspection (and passing the appraisal is not a stamp of FHA approval or a guarantee that a home is free of problems), the FHA appraiser is required to report problem conditions may be spotted during the process. What does this mean? HUD 4000.1 states, “The Appraiser must report known environmental and safety hazards and adverse conditions that may affect the health and safety of the occupants, the ability of the property to serve as collateral, and the structural soundness of the improvements.” This is found on page 491, which also adds the following description/definition | more...