Articles Tagged With: FHA Appraisals

January 2, 2015

FHA Appraisal Rules: A Reader Question

A reader asks, “My husband and I were just approved for a FHA loan or a RD loan, but we are being told the house doesn’t qualify because the basement only has small windows (no step outs and no door leading outside). The basement contains two bedrooms, a living room and a laundry room. Is there anyway to modify the basement to ensure the house qualifies?” The FHA appraisal would recommend corrections or repairs in such cases based on FHA minimum property requirements and/or state/local building code. Much depends on building code requirements for your state or local area. Borrowers who find themselves in these situations would need to consult the local authority to see what is required there-the FHA doesn’t keep records of all state or local building code | more...

December 12, 2014

FHA Appraisal Appeals: A Reader Question

By Joe Wallace

A reader asks, “A buyer for my property secured an FHA approval and had a FHA appraisal performed. The appraisal was well below the contract price, so much so that it was below the County’s tax assessed value. Better comps and explanations were provided for the market area, but the appraiser would not amend the appraisal.” “The buyer went to another lender to but was told the previous FHA appraisal was valid for 6 months and a new appraisal could not be requested. Is this true, even if the circumstances were clearly presented?” In some limited cases an FHA appraisal may be appealed, but this would be handled on a case-by-case basis and would be at the FHA’s discretion. FHA loan rules do not permit borrowers to appeal an appraisal | more...

October 8, 2014

FHA Loan Reader Questions: Cisterns

By Joe Wallace

A reader asks,“I am planning to sell my Manufactured Home on a permanent foundation in So. California. Water to the home is provided by a well on the property. Due to a drought in the area for the last 5 years my well still works but is not producing enough water for my usage.” “To remedy this problem I have had a 5,000 gallon storage tank installed on the property with q booster pump that serves the home. I have a water truck bring me “city water” to fill the storage tank when I need it to supplement the low producing well. This arrangement works totally fine. My question is: will this situation prevent a qualified buyer from being approved for an FHA loan to purchase the property?” FHA loan | more...

September 24, 2014

FHA Appraisals and Loan Approval: A Reader Question

By Joe Wallace

A reader asks, “In our contract, we agree and stated the sale was as is. The price had been adjusted for this. We listed that the a/c needed repair on the disclosure. I did not want to spend the money to repair it because I live alone and put in window units, plus my buyer said she planned on replacing it anyway.” “This was noted on our contract. 3 months later the lender says the a/c has to be in working order, even though the window units work fine and the central heat did work. I had it fixed, $825.00 for a circuit board! What a waste of money. I would rather have given it to my buyer to replace the whole thing! Since they knew about this upfront, should | more...

September 18, 2014

FHA Minimum Property Requirements: Central Air

By Joe Wallace

A reader asks, “I am trying to purchase a home with an FHA loan. The central air in the house I’m trying to purchase is not working, however, the owner has window units in each room. They all work and cool the house very nicely. I was planning on replacing the central air after purchasing the home. I’ve been told the house will not qualify because the central air is not working. Won’t the window units suffice as meeting the minimum standards of living?” One interpretation of the FHA minimum property standards in this situation would be that it’s not the presence of the window units in the home that would be the issue, but rather than an installed appliance/system in the home is not functioning properly. The home may | more...

September 15, 2014

Assessments Versus FHA Appraisals: A Reader Question

By Joe Wallace

A reader asks, “How is the home value assessed for a 203K, fixer-upper loan? For instance if we bought a home for $200,000, and also borrowed $30,000 in repair funds to improve the home, would the home value continue to be assessed at $200,000 or could an appraisal actually be used in this case? I have read that home value with FHA PMI purposes will only be assessed at the LOWER of an appraisal and the original loan amount.” For questions like these, terminology is important when it comes to arriving at the answer needed. For example, there is a big difference between an assessment and an appraisal–and appraisal is done by an FHA-assigned professional to determine the value of the property to be purchased or financed by an FHA | more...

September 2, 2014

FHA Loans: Appraisals Versus Inspections

By Joe Wallace

A reader got in touch recently with the following: “I recently purchased a home with foundation issues. It was not required of me to get a home inspection buy the realtor. However it was required of me to get an appraisal by the realtor.” “It is unfortunate for me that I could not be there during the time of the appraisal, the real estate agent was there . It is also unfortunate for me that I did not survey the garage where the damages exist. Is it proper for a licensed real estate agent to sell property without disclosing foundation issues? I also got an FHA Loan to purchase this property.” It is true that FHA appraisals are required, and home inspections are not. However, no borrower should purchase a | more...

August 18, 2014

How Long Are FHA Appraisals Valid? A Reader Question

By Joe Wallace

A reader asks, “Our home was on the market, the buyer got an FHA Appraisal, their financing fell through yesterday, the appraisal was done last week, Will the new buyer who is FHA also have to get a new appraisal or can the first one be used since it has only been two weeks?” FHA loan rules covering appraisals are found in HUD 4155.1, which states: “FHA appraisals on existing properties are valid for six months. However, appraisals cannot be reused –during the six month validity period once the mortgage for which the appraisal was ordered has closed, or –for a subsequent refinance, even if six months have not passed.” Re-use of an FHA appraisal is specifically addressed in the FHA loan rulebook when it comes to refinance loans: “A | more...

June 27, 2014

FHA Appraisals and Required Corrections: A Reader Question

By Joe Wallace

A reader asks about a refinance loan situation where “an appraisal is done there’s a recommendation of installing an electric line water heater and roof sealing, can the loan be approved without doing these improvements or can the cost be added to the mortgage loan to do so?” If the FHA appraiser recommends corrections or alterations, these are usually done as a condition of loan approval and may require a compliance inspection to insure they have been accomplished. However, the second part of this reader question does offer the borrower some possibilities when the borrower is required to pay for the fixes. According to the FHA loan rules published in HUD 4155.1 Chapter Two, Section A, under the heading titled, “Adding Repair and Improvement Costs to the Sales Price” we | more...

June 24, 2014

FHA Appraisal Rules For Foundations: A Reader Question

By Joe Wallace

A reader asks, “We are up for a FHA refinance and the appraiser noted that we have a crack in our foundation. We have never had water in the basement ever and it hasn’t moved since i originally purchased the home. We are waiting to hear back from our lender. What is the likelihood this loan will be denied?” There are several issues that apply in a situation like this including the severity of the foundation problem. Not knowing that specific information makes it hard to know which way the call might go but it’s impossible to speculate what one financial institution might do. But that’s not the most relevant issue at work here. State or local building code may address the foundation issue specifically. If the home is not | more...