Articles Tagged With: FHA Appraisals

October 18, 2016

Appraisals: FHA Loans and MPR Rules

We get many questions about FHA appraisals, and there are some critical issues to keep in mind when considering this mandatory part of the FHA loan process. A home to be purchased with an FHA mortgage loan must pass an FHA appraisal, which is intended strictly to assess the fair market value of the home and insure the property meets FHA minimum standards. Note the use of the use of the word, “minimum”. Appraisals are NOT intended as INSPECTIONS of the property. A home that passes an FHA appraisal is not guaranteed to be free of problems, and the FHA makes it clear that borrowers should not accept the appraisal as any sort of stamp of FHA approval. In all cases, a borrower purchasing a home with an FHA mortgage | more...

FHA One-Time Close Construction Loans In 2019

October 13, 2016

Second Appraisal Rules For FHA Mortgages

By Joe Wallace

There are some circumstances where a borrower may wonder about requesting a second appraisal on a property to be purchased with an FHA mortgage. For example, if the loan applicant decides to switch lenders, is a new appraisal required? What about cases where there’s a disagreement over the results of the appraisal? Many of the answers to these questions are circumstantial-it all depends on the nature of the request. Sometimes a second appraisal may be permitted IF conditions described in HUD 4000.1 exist. But in other cases a second appraisal is simply not permitted. One good example of that-a borrower or seller cannot request a second appraisal to increase the fair market value of the property. However, if “material deficiencies” are suspected in the original appraisal, the market value of | more...

October 11, 2016

FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “If a person purchased a home with an FHA loan, and later found out that there were serious mold issues with the home that had been covered up with sheets of drywall and structural issues with a foundation which is collapsing and joists sagging due to not building to code.would there be any recourse for the owner of a home that now cant afford to do the necessary repairs to fix?” These are serious issues, and unfortunately there is no one set answer-much depends on the circumstances involved. There are several questions which can affect the answer including whether or not the borrower paid for a home inspection in addition to the FHA appraisal. The FHA official site warns borrowers in no uncertain terms that the FHA | more...

August 25, 2016

FHA Loan Appraisal Rules: A Reader Question

By Joe Wallace

A reader asks, “I have been told by my realtor and the lender that an appraisal on a house I own will be on record for 180 days. They said that the appraised value will be on record and no other FHA appraisal can be made during this 180 day period. Is there a master list that other lenders and appraisers cross reference during this six month period? My reading of your blog indicates that if another FHA buyer makes an offer on my property. a different appraisal would need to be performed.” HUD 4000.1 does indeed contain language that leads one to believe that a new appraisal may be required. On page 120, we find the following: “The Mortgagee must order a new appraisal for each Mortgage or refinance | more...

August 10, 2016

FHA Loan Questions: Appraisal Issues

By Joe Wallace

A reader asks, “We just purchased our first home using an FHA loan. After 2 months in the house we had a typical Arizona monsoon storm come through. Our home flooded due to poor drainage on 3 sides of the house. The grading slopes towards the structure and not away. There are no gutters on the home nor a drainage system to move the pooling water away from our home. What recourse do we have when the FHA approved appraiser reported that there are no problems with the grading and drainage? Our home is damaged and our insurance does not cover flood damages.” The FHA official site is clear on the subject of FHA appraisals in that the appraisal process is not meant to be a home inspection. The appraisal | more...

July 29, 2016

FHA Loan Questions: Appraisal Concerns

By Joe Wallace

A reader asks, “I am about to put my house on the market. But now I’m starting to worry about a crack on the basement floor that has been there since I bought the house, I never worried about the crack, its due to the house settling to one side years ago. Other than that the house is structurally sound and basement is very dry. I think the house dips about 3/4 inch. Is this something that would cause an inspection to fail?” There are several issues that can make questions like these difficult to answer. The first is to remind borrowers and sellers alike that an FHA appraisal is NOT an inspection, nor does passing the FHA appraisal process equal an FHA stamp of approval on a property that | more...

July 19, 2016

FHA Loan Appraisal Rule Questions: A New Appraisal For A New Lender?

By Joe Wallace

A reader asks, “I am selling a home that has a septic system that does not meet local requirements but has been grandfathered. The septic system has been inspected and is in good working condition. The appraiser said that because the age of the septic (greater than 30 years) that it would need to be replaced.” “We bit the bullet and decided to replace the septic but under new requirements we are going to also have to replace our water well to fit the new septic on our property. The combined cost of replacing both system will approximately $15k. Should I ask the buyers to try a different lender or is this going to be an issue with all lenders/appraisers?” FHA loan rules governing this issue can be found on | more...

Can I buy a manufactured home with an FHA loan?

May 25, 2016

FHA Loan Appraisal Expiration Dates, Update Requirements

By Joe Wallace

One common question about FHA home loan rules involves how long an appraisal is considered valid before it can no longer be used. FHA loan rules for this topic are found in HUD 4000.1 and address both the age of the appraisal as well as the age of other documentation not considered “evergreen” or without an expiration date (such as divorce decrees, military discharge paperwork, etc). According to HUD 4000.1, in general terms the documents to be used for “…the origination and underwriting of a Mortgage may not be more than 120 Days old at the Disbursement Date. Documents whose validity for underwriting purposes is not affected by the passage of time, such as divorce decrees or tax returns, may be more than 120 Days old at the Disbursement Date.” | more...

May 24, 2016

FHA Loans: The Importance of a Home Inspection

By Joe Wallace

From time to time we handle reader questions asking about defects in homes discovered after purchase. When applying for an FHA home loan, an FHA appraisal is a requirement for loan approval, but a home inspection is an option the borrower is free to use (or not). But this “option” is an investment no borrower should skip, as FHA appraisals are not a guarantee that a property is free from defects or problems. One of the most common questions we get asked in this area is, “What can be done about (defective condition X) discovered in my home after my loan closed?” Our answer always involves asking whether the borrower paid for the home inspection or simply relied on the FHA appraisal to indicate that the home was potentially “approved” | more...

May 23, 2016

FHA Appraisal Rules: Shared Wells

By Joe Wallace

From time to time we get asked very specific questions about the FHA appraisal process-some readers want to know about specific aspects of the appraisal and whether or not a certain condition is considered acceptable under FHA loan rules. As always, we like to remind everyone that FHA appraisal rules often are not the only ones that may apply for a given situation or with regard to a certain feature. In some cases FHA appraisal requirements don’t spell out a specific guideline but instead defer to the local or state building code. In other circumstances, FHA appraisal rules may be quite specific. One area where FHA appraisal rules are specific has to do with the nature of a property that is served by a shared well. HUD 4000.1 page 162 | more...