Articles Tagged With: FHA Appraisals

September 21, 2015

FHA Loan Appraisal Questions

There are many readers who ask us appraisal-related questions in the comments section here; some are general questions, while others get quite specific. Here’s an example of one of the more specific FHA appraisal questions we’ve been asked recently: “If a bedroom has two windows with keyed burglar bars do both have to be replaced with quick release burglar bars?”. The FHA has recently issued HUD 4000.1, which is a comprehensive policy guidebook for FHA single family loans including references to FHA appraisal standards. Those references do include a mention of bars on windows: “The Appraiser must report when the Property has security bars on bedroom windows or doors.” Note that this reference says nothing about replacement or removal, however state or local building code might. So what all borrowers | more...

September 1, 2015

FHA Appraisal Questions: Peeling Paint And Paint Chipping

By Joe Wallace

FHA appraisals can be tricky to understand, depending on the outcome. For example, we get asked several times a year why an FHA appraiser required corrections on cracked or peeling paint on surfaces in a given home. The question is usually associated with the seeming cosmetic nature of these corrections. “Why,” the readers will ask, “is this a must-fix when it’s just some paint peeling off a windowsill or door frame?” The answer in this particular case has a lot to do with lead abatement. Depending on the age of the home, lead paint may or may not be present. The FHA appraisal process requires mandatory correction of peeling paint in order to reduce potential or actual lead hazards. It’s true that this could, in certain cases, be perceived as | more...

July 28, 2015

FHA Loans, Foundation Trouble, And Home Inspections

By Joe Wallace

A reader got in touch with us to ask about a situation where a home with foundation problems was purchased with an FHA loan. The reader says a home inspector was not hired because the foundation issue was “supposed to be taken care of” prior to the borrower moving in. Later, the borrower discovered that no corrections to the foundation had been made and further problems were discovered. The main question was whether or not the borrower has any legal recourse in situations like these. FHA loan rules and the FHA/HUD official site are very specific when it comes to borrowers who rely on FHA appraisals and their outcomes instead of hiring a home inspector to take a more in-depth look at the property. The FHA appraisal is not a | more...

July 16, 2015

FHA Loans And Federal Law

By Joe Wallace

We’ve been discussing FHA loans, the Fair Housing act, and other federal laws lately. There have been many changes to applicable federal law in recent times that can and do directly affect the mortgage lending process. It’s no surprise that the FHA single family home loan program, being created by the federal government, would lead the way in pro-consumer regulatory changes and set the example when it comes to requiring equal treatment for all qualified borrowers. But some of the most important federal laws and regulations aren’t brand new–they’ve been around for quite some time. Some have been further modified to make them more inclusive. The Fair Housing Act now includes language that protects people regardless of their gender identity, family status, sexual orientation and much more. FHA loan rules | more...

July 13, 2015

What You Should Know About FHA Loan Appraisal Fees

By Joe Wallace

Based on the reader questions we get in our comments section, there can be some confusion over the nature of FHA appraisals, appraisal fees, and compliance inspections. The appraisal process is an important part of the overall experience of buying a home with an FHA mortgage loan; borrowers should budget for appraisal fees and anticipate needing to pay for a compliance inspection (just in case). The appraisal process can include a required compliance inspection should the appraiser note conditions that must be corrected as a condition of loan approval. The compliance inspection requires a separate fee and when it’s time to budget for the appraisal process the borrower should assume the compliance inspection might be required. The amount of the appraisal fee and compliance inspection fee will vary depending | more...

July 2, 2015

FHA Appraisals: Vapor Barrier Issues

By Joe Wallace

A recent reader question that arrived in our comments section involves an FHA appraisal that required a vapor barrier on all exposed dirt. The reader complained that the FHA appraiser didn’t explain how to correct the issue and asked us to define how it can be done. One objection to the FHA appraisal in this case was that the reader was under the impression that the FHA had removed the vapor barrier requirement from its list of minimum property requirements. While we aren’t experts on vapor barriers or how they are to be carried out, we can address the issue of being required to carry out a correction or repair that is not specifically required by FHA minimum property standards. It’s very important to know that FHA minimums are not | more...

When Is An FHA Loan Better Than A Conventional Loan?

June 24, 2015

FHA Loan Minimum Property Standards

By Joe Wallace

When you’re shopping for the home you want to purchase with an FHA mortgage, it’s logical to wonder what kinds of standards the property must meet in order to qualify for an FHA loan. FHA minimum standards address a variety of issues including a home’s location, its condition, and how the current state of the home may affect its future value. At the time of this writing, HUD 4155.2 Chapter Four has a set of basic standards that guide the FHA appraiser, which start with the following: “The site conditions of a property must be free of health and safety hazards.” That’s followed by some guidance on homes with lead-based paint. “If the property was built before 1978: –the seller must disclose known information on lead-based paint and lead- based | more...

June 8, 2015

FHA Appraisals and Loan Approval

By Joe Wallace

When you are ready to commit to buying a home with an FHA mortgage, one of the big steps toward making that happen is the appraisal process. Borrowers sometimes confuse FHA appraisals with a home inspection, but the appraisal is not a complete, top-to-bottom review of the home. A property may be appraised and approved for the loan, but still contain issues unknown to the borrower. That is why a home inspection is so important. How does the appraisal process work? An assigned FHA approved appraiser comes to the home and personally walks through it, noting any obvious defects in workmanship, code compliance issues, and other things that could require attention as a condition of FHA loan approval. Sometimes there are no issues and the home “passes” the FHA appraisal | more...

June 3, 2015

The FHA Appraisal Process–How Does The Lender Choose Your Appraiser?

By Joe Wallace

The FHA appraisal process is different than the home inspection process. For example, the home inspection is an optional but strongly recommended part of the home buying journey that the borrower is responsible for. You should never purchase a home without hiring a home inspector to review the property. An FHA appraisal–the mandatory, but not exhaustive review of the home–is carried out an an FHA appraiser. This appraiser, according to HUD 4155.2 Chapter Four, is hired as a third party by the lender. Did you know there are FHA loan rules that guide the lender in how an FHA appraiser is to be chosen? According to Chapter Four, the lender must recognize that not all appraisers are equal in skill or experience. “An appraiser who is primarily experienced in appraising | more...

What happens to my FHA loan in a natural disaster?

June 2, 2015

The Purpose of the FHA Appraisal For An FHA Home Loan

By Joe Wallace

When you want to buy a home with an FHA mortgage loan, the appraisal process is an important step towards getting the loan approved. The lender is required to determine the loan amount based on the lesser of the appraised value or the sales price of the property. And while borrowers should not confuse the required FHA appraisal with the optional, but still crucial home inspection process, it’s important to know how the FHA defines and views the appraisal in the home loan process. FHA loan rules for appraisals are currently found in HUD 4155.2, Chapter Four. In that chapter, under a heading titled “Purpose of a Property Valuation”, we find the following: The purpose of the property valuation process is to: –determine eligibility for mortgage insurance based on the | more...