May 14, 2015
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” explains it clearly. The document says in bold print, “Appraisals are not home inspections”. A home inspection (not the FHA appraisal) is designed to do a specific job for the customer:
“A home inspection gives the buyer more detailed information than an appraisal — information you need to make a wise decision. In a home inspection, a qualified inspector takes an in – depth, unbiased look at your potential new home to:
–evaluate the physical condition: structure, construction, and mechanical systems
–identify items that need to be repaired or replaced
–estimate the remaining useful life of the major systems, equipment, structure, and finishes”.
Here’s a good rule of thumb to consider when trying to figure out where the home inspection fits into your house buying process. Once the appraisal is done and the appraiser gives the results to the lender, the borrower will either need to pay or will have paid the fee for the appraisal service. The home inspection is optional, but is also a fee paid by the borrower for a service–one that is far more in depth than the appraisal.
If you have not paid “twice”, meaning if you have not paid for an appraisal AND a home inspection, you simply are not making an informed choice to purchase the home and there is danger that you could run into problems later on.
A borrower who HAS paid for the optional but very necessary home inspection will make the purchase as a more fully informed borrower. The FHA cannot do anything about a home that has been purchased without a home inspection–the FHA official site states clearly it cannot cancel or modify your loan, give you a loan for repairs, or any other type of intervention that comes as a result of problems that were not detected because the borrower failed to pay for a home inspection prior to closing the sale.
Do you have questions about FHA loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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