Articles Tagged With: FHA Appraisals

When Is An FHA Loan Better Than A Conventional Loan?

May 21, 2015

FHA Loan Appraisals and Home Value: A Reader Question

A reader asks, “We built a new home and within a few months started noticing moisture spots on our basement floor. After no action from the builder for 8 months, we have had to hire an attorney to make them start fixing it. It has been recommended that an interior peripheral drain (or a waterproofing system) be put in.” “The builder defect is our exterior drain was put in incorrectly so drainage water from rain and snow melt is ending up under our slab. I am very concerned about how this will effect resale someday. Have you seen an appraisal adjustment made on a home having this sort of system in place?” The problem with appraisal-related questions like this one is that conditions vary from market to market. What may | more...

May 21, 2015

FHA Refinance Loans, Appraisals, and Refunds

By Joe Wallace

A reader asks, “I closed a cash out refinance in December 2014. The term was a fifteen year at 4.75%. I received a flyer from my lender in February that offered a 3.25% rate. I decided to inquire about a thirty year term as circumstances had changed significantly after the first of the year with my wifes job. The lender sent me a GFE and we locked in the rate. After a short while I was told I had to pay for another appraisal and basically resubmit all of the paperwork that I had previously sent to the lender. As of three months later I still have no refinance and am out of pocket over $500.” “Is this legal to open two FHA cases within two months and why was | more...

May 19, 2015

FHA Loan Appraisals: The Foundation

By Joe Wallace

A reader asks, “I am in the process of buying a home using a fha loan. The house that we are buying has a cracked foundation and the seller has already had it repaired and the repair has a lifetime transferable service and warranty. With it having had a repaired foundation will this pass the FHA minimum property standards? We have an appraisal in about a week and I am terrified its going to kill the deal.” Unfortunately it’s impossible to say whether a foundation repair job would bring the foundation up to minimum property requirements or state/local building code. Without inspecting the foundation, giving such a determination would be iffy at best. The important thing to remember is situations like these is that FHA loan standards aren’t the only | more...

May 15, 2015

FHA Appraisals: A Reader Question

By Joe Wallace

A reader sent us a lengthy question recently about FHA appraisals. While won’t reprint the entire message here for the sake of brevity, we’ve kept the most relevant portions: “We are considering a HECM loan. The appraiser came out and we were not impressed. Prior to leaving, he told my husband and I that there was a couple of small things we needed to do before being able to close the loan(some peeling paint and a 1988 Cadillac inherited from my dad that was under our carport that we did not have licensed). Then we get a copy of the appraisal and under improvements he marked NO where it asks if there are any physical conditions that affect the livability, soundness, or structural integrity of the property. However, under reconciliation, | more...

May 14, 2015

The FHA Appraisal Is Not A Home Inspection

By Joe Wallace

In recent weeks we have gotten a variety of reader comments and questions about FHA appraisals–some of which repeat an oft-heard misconception about the FHA appraisal process. One of the questions we have to answer more often than we’d like goes something like this: “The house I wanted to buy was inspected by the FHA appraiser and now there are serious problems with the roof/septic/plumbing/electrical system/etc. Why did the FHA inspector not see these problems during the appraisal process?” While we do not claim to speak for the FHA or represent the FHA in any way, a reading of the FHA official website shows the FHA’s official stance on what the appraisal process is and is not supposed to do. A document titled, “For Your Protection, Get A Home Inspection” | more...

May 11, 2015

FHA Loan Appraisals: Sewer/Septic

By Joe Wallace

A reader asks, “We closed on house on 3/31. Had inspection. Stated was sewer, prev owner said was sewer, realtor said was sewer. On 5/8 found waste backed up in toilet in basement, called plumber, found out we have a septic system, currently waiting on them to come out inspect and pump.” “We have a FHA loan. How was this missed? we have no problem paying to have it pumped, but who is responsible if it more then pumping out issue? The company we called (only one in area) stated he had just pumped it 2 years ago. So prev owners knew it was on septic.” There is one important question which must be answered–did the reader assume the FHA appraisal could substitute for a home inspection, or did the | more...

April 30, 2015

“Second” FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “I am in the process of selling my home. There was an appraisal done and it came in low. We negotiated with the buyers on that appraisal. Now I am learning they got another appraisal that was higher so they could get a higher loan amount for closing costs but will not provide the appraisal to us.” “By the way, this is FHA and apparently the lender never filed the first appraisal with the FHA. Additionally, the lender has now changed their story stating they paid for the first appraisal and that the buyer paid for the 2nd appraisal and therefore they dont have to give it to us for re-negotiations. This cant be legal? And surely I have recourse? We are set to close tomorrow, and | more...

April 11, 2015

FHA Appraisals Versus Home Inspections: Part Two

By Joe Wallace

A reader asks, “My follow up question is that I believed that there would be an FHA inspection done and if serious problems or defects are found then the seller would be required to fix the issues. I realize FHA does not “check” for everything so a home inspection is still in order, but has this rule changed?” This is a follow-up to our answer to this reader’s question in our April 3, 2015 post, “Is A Home Ever ‘FHA Approved'” where we answered the original question as follows: “…there is one serious issue raised here that we MUST address–the prevailing misconception some borrowers have that the FHA or HUD would ever ‘approve’ a home. Some borrowers mistakenly assume that because a home passes the appraisal process that it is free | more...

March 17, 2015

More On FHA Appraisals Versus Home Inspections

By Joe Wallace

In our last blog post we addressed a reader question about FHA appraisals and why appraisals are not considered home inspections. This is a very important issue and deserves some extra attention here for one important reason: an FHA appraisal is never a substitute for a home inspection. Borrowers may be tempted to save a few hundred dollars and skip having the voluntary (as in, not required as a condition of the loan) home inspection performed, but doing so is a very bad idea. An FHA appraisal is, as the FHA official site points out, for the lender and addresses the lender’s needs only. A home inspection, which is not required by the lender as a condition of the loan, is for the borrower and is designed to look out | more...

January 31, 2015

FHA Loan Rules On Appraisals and Required Corrections: A Reader Question

By Joe Wallace

A reader asks, “Is the seller responsible to pay for all repairs before closing?” Assuming that this reader question is in reference to required corrections or alterations to a home listed by the FHA appraiser, much depends on the type of repairs or corrections required. If repairs or corrections are required to fix hazardous conditions, those fixes must happen and a compliance inspection (where required) must occur before the loan can be approved. Let’s see what HUD 4155.1 Chapter Four says about the appraisal process and required corrections: “In the performance of an FHA appraisal, the appraiser must • denote any deficiency in the appropriate section(s) of the appraisal report (site issues in the site section, improvement issues in the improvements section, and so on), and • note those repairs | more...