Articles Tagged With: FHA Appraisals

April 18, 2018

What You Need To Know When Switching FHA Lenders

There are several reasons why a borrower might decide to switch FHA lenders during a home loan transaction. In cases where the switch happens, borrowers should know certain FHA guidelines that can affect the transaction-especially if an appraisal has already happened. Some borrowers think about switching lenders because they have had an unsatisfactory experience. Others may simply be offered a better deal. But there are some instances where the borrower is tempted to switch lenders because of an appraisal issue-namely that the appraisal did not value the property as expected. In such cases, when a borrower is tempted to get a new lender and a new appraisal, what should be known about that process? The first thing borrowers should know is that new FHA appraisals are not possible simply because | more...

April 11, 2018

FHA Loan Requirements For Multi-Unit Properties: Part Two

By Joe Wallace

In a previous blog post, we discussed the FHA loan rules for purchasing multi-unit properties. It’s true that an FHA borrower can buy a home with as many as four living units. It’s also possible to rent out the unused units in the home, but FHA loan rules do require at least one person obligated on the mortgage to occupy the home as the primary residence. FHA home loans are generally for owner/occupiers only. You are permitted to rent out the unused living units in your new home, but those units cannot be rented out for periods less than 30 days, offer hotel-style services such as food, bellboy service, etc. The rules for these issues are very clear, but what is to stop a borrower from purchasing a new home | more...

March 1, 2018

FHA Appraisal Rules And Model Building Codes

By Bruce Reichstein

When it comes to FHA appraisal rules, it’s easy to forget that the appraisal requirements and minimum property standards set by the FHA are not the only regulations which must be followed. State law, and local building codes also apply. The FHA/HUD official site includes instructions to participating lenders and appraisers about model building codes and how FHA mortgage appraisal rules work together in the FHA loan transaction process. According to FHA.gov, “The Minimum Property Standards (MPS) establish certain minimum standards for buildings constructed under HUD housing programs. This includes new single family homes, multi-family housing and health care type facilities”. At one time there were a variety of minimum property standards for different types of properties. But since the era of the 1980s, the Department of Housing and Urban | more...

February 14, 2018

FHA Appraisal Rules When Switching Lenders

By Bruce Reichstein

Do you know what the FHA loan appraisal rules are for switching lenders? It’s true that not all borrowers will experience a situation where a change in lenders is needed, but a borrower is free to do so under FHA loan rules. In such cases an appraisal transfer may be required, and in others the new lender may wish to order a second appraisal. Is the new lender allowed to do so? According to HUD 4000.1, the FHA loan handbook, the lender is prevented from ordering a second appraisal (new lender or not) just to get a different result from the process. But there are circumstances where the new appraisal might be necessary and permitted. HUD 4000.1 states that for the original lender, “A second appraisal may only be ordered | more...

What Credit Score Is Needed For An FHA Mortgage?

February 9, 2018

Can I Request An Appraisal Update For An FHA Mortgage?

By Bruce Reichstein

Can I request an appraisal update for an FHA loan? The FHA appraisal expiration issue is one that won’t affect all borrowers, but when it does become an issue, it’s good to know what the FHA loan rules are; in general FHA appraisals have a 120 day validity window, with an option for a 30-day extension. The 30-day extension is, as we discussed in a previous blog post, addressed in the FHA loan handbook as follows: “The 120 Day validity period for an appraisal (see Ordering Appraisals) may be extended for 30 Days at the option of the Mortgagee if (1) the Mortgagee approved the Borrower or HUD issued the Firm Commitment before the expiration of the original appraisal; or (2) the Borrower signed a valid sales contract prior to | more...

February 8, 2018

When Does My FHA Appraisal Expire?

By Joe Wallace

When does my FHA appraisal expire? It’s a question that not all borrowers find themselves of need of answering, but there are cases where there may be unexpected delays trying to get to loan approval or a closing date. Some borrowers get nervous about issues like appraisal expiration. Should they be? General FHA Loan Rules Governing The Age Of Loan Documents In general, there’s a basic expiration for FHA loan documents except for “evergeen” paperwork submitted as part of the loan package such as supporting documentation for divorces, alimony payments, tax documents, and related information. HUD 4000.1 says of the general age of loan documents, “Documents used in the origination and underwriting of a Mortgage may not be more than 120 Days old at the Disbursement Date. Documents whose validity | more...

January 29, 2018

What You Need To Know About FHA Home Loan Appraisals

By Joe Wallace

What you need to know about FHA home loan appraisals includes the difference between an appraisal and an inspection, and what the appraiser looks for when spotting defective conditions and why. The most important thing to know overall about an FHA home loan appraisal is that the appraisal is not a tool for the borrower to use to determine whether the house is suitable; the appraisal is a tool for the lender to establish the fair market value of the home. Do not rely on the appraisal to tell you the home is in acceptable condition, it was not designed to do this no matter how it may seem from the appraisal report. The borrower-arranged home inspection is the best way to “test drive” a home to see if it | more...

January 25, 2018

FHA Loan Options For Buying A Home

By Joe Wallace

FHA loan options for buying a home include choices on the housing type you need, the type of home loan you need, and sometimes even the circumstances of the purchase, in the case of people who are buying homes in federally declared disaster areas. Do you know what your new purchase FHA home loan options are? FHA Loans Available For Many Types Of Homes FHA home loans can be used to purchase property that will be owner-occupied residences, but the home can have as many as four living units. That means the borrower has the option to rent out unused living units if she chooses. Owner occupancy is a condition of loan approval, so you can’t use an FHA loan to purchase an investment property (one you intend to rent | more...

December 26, 2017

FHA Loan Rules: Appraisal Standards And Building Code

By Bruce Reichstein

Do you know the FHA loan rules for appraisal standards and compliance with building code? As a borrower, you may not need to know every single aspect of the FHA loan rules for appraisals, but understanding the basic concepts can help you make a more informed decision when it’s time to choose a home and a home loan. FHA Appraisal Rules: Some Basics The FHA appraisal is a tool for your lender to establish the fair market value of the property and to establish the adjusted value of the home for purposes of setting the loan amount. The appraisal is not a complete, in-depth, top-to-bottom inspection of the property and should never be used by the borrower as such. Only the optional, borrower-arranged and borrower-paid home inspection can do this. | more...

December 20, 2017

What FHA Appraisal Issues Should I Know About?

By Bruce Reichstein

What FHA appraisal issues should I know about? That’s a question that likely doesn’t get asked enough, but the answers can help you make a more informed choice when buying a home. FHA Appraisal Rules For The Living Unit The FHA loan handbook spells out several basic requirements for the living unit which include (but may not be limited to) the following guidelines-the lender is required to insure each home has the following: -a continuing and sufficient supply of safe and potable water under adequate pressure and of appropriate quality for all household uses; -sanitary facilities and a safe method of sewage disposal. Every living unit must have at least one bathroom, which must include, at a minimum, a water closet, lavatory, and a bathtub or shower; -adequate space for | more...