May 19, 2022

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Articles Tagged With: FHA Appraisal Rules

FHA loans

FHA Appraisals: What To Remember

The FHA appraisal is one of the most important pre-closing day aspects of your home loan process.  Without an appraisal, your lender can’t know if the home meets minimum basic standards for safety, remaining economic life, and serviceability. The lender also can’t make a realistic judgment about the fair market value of the home without an appraisal. What should you know about this process and how it affects you? FHA appraisals are a tool for the lender and not a tool for the borrower. You may be privy to the results of the appraisal, but that does not mean it was designed to help you as a borrower. It is not meant to tell the borrower anything actionable, especially where the condition of the home is concerned. That is the | more...

 
Cash out refinancing

FHA Home Loans: The Escape Clause

Of course it’s not formally known as the “escape clause” but first-time homebuyers should know about the FHA home loan rules that govern what happens if the appraised value of the home comes in lower than the asking price of the real estate. HUD 4000.1 instructs the lender that a clause must be inserted into any legally binding commitment to purchase the home that guarantees that the borrower does not forfeit earnest money or retain an obligation to purchase the property if the appraisal is lower than the sale price. The wording of such a clause is suggested in HUD 4000.1 (page 117) as something to this effect: “It is expressly agreed that notwithstanding any other provisions of this contract, the purchaser shall not be obligated to complete the purchase | more...

 
FHA and HUD

Appraisals Vs. Home Inspections: What You Need To Know

Can you buy a house relying on the appraisal alone to tell you about the home’s condition or should you shell out the money to pay for a home inspection? That’s a question more than one home buyer has answered in the wrong way. Here’s one version of a very common question asked about FHA home loans, appraisals, and the inspection process.  “I bought a house and I am discovering major problems and code violations. I did not have a home inspection and was told the FHA does its own inspection. Can you explain why the FHA inspection did not find these violations of code?” To start, the FHA does not inspect homes and you should not expect the FHA appraisal process to be anything more than what it is | more...

 
FHA Loan

FHA Home Loans: Mistakes To Avoid When It’s Time To Close

As you get closer to the day when you sign the paperwork, pay your closing costs, and take possession of your new home, there are some important mistakes to avoid. Do you know what they are? FHA home loan closing day is an important milestone; make sure you know what to expect leading up to the big day. Don’t Move The Same Day You Close Closing dates can change, circumstances may require a new closing date. If you hired movers or rented a truck on the same day that you are supposed to close the deal, you may be disappointed. Don’t Be In A Hurry Take the time to carefully read all documents you are required to sign, don’t skip the home inspection, and don’t give in to any kind | more...

 
HUD

HUD Announces Changes To Exterior-Only Appraisal Guidelines For FHA Purchase Loans

When the FHA and HUD began adjusting policies to accommodate social distancing requirements meant to mitigate COVID-19, one of the measures it started was the use of desktop-only and exterior-only appraisals. This meant that an FHA appraiser conducting a home inspection was no longer required (temporarily) to step into the home to perform the appraisal. The appraisal could be accomplished in person from the exterior only (hence the name of the “exterior-only” appraisal) or by using a computer in a desktop-only type of review of the property. These measures were meant to be strictly temporary and had expiration dates when these modifications to FHA policy would expire. But later, the FHA and HUD decided to extend the deadlines in light of the fact that coronavirus emergency did not abate in | more...

 
FHA loans

FHA Appraisal Refunds?

Some borrowers don’t understand the nature of the home loan appraisal process and as a result, they often ask a common question if the results of the appraisal don’t come back as expected. The process works like this–a buyer goes looking for a home to purchase with an FHA mortgage. They find a home they want to buy and before the home loan can be approved, there is a required FHA appraisal. The appraisal is a tool for the lender, not the borrower, to help establish the market value of the property and insure the house meets minimum standards. The home loan amount is based in part on the appraisal and homes don’t always appraise for what the borrower or seller thinks it should. In situations where the appraisal comes | more...

 
FHA Loan

Can I Get A Second FHA Appraisal If I Don’t Agree With The First One?

Can I get a second FHA appraisal if I don’t agree with the first one? This is a common question, normally asked if the appraised value of the home comes in differently than a buyer or seller expects it to. FHA loan rules don’t allow a borrower to be forced into purchasing a home where the appraised value is lower than the asking price, so it’s an issue that can definitely affect a home loan transaction depending on what the borrower wishes to do in such cases. Can I Order A Second FHA Appraisal? FHA appraisals are ordered by the lender, so the borrower cannot initiate any second appraisal requests. In any case, the lender is restricted on how and when a second appraisal may be ordered. Specific Restrictions On | more...

 
What You Need To Know About Your FHA Home Loan

Don’t Buy A House Without A Home Inspection

Here’s a sadly common example of a home buyer question that is asked after the purchase of a house with an FHA home loan has closed, the new owners have moved in, and suddenly discover there are serious issues with the property: “I did not get a home inspection when I purchased my house and now there are problems. Do I have any recourse?” If what is meant by “recourse” involves some form of intervention or relief from the lender or the FHA, the general answer is no–you don’t have any avenues of recourse when buying a home if you choose not to pay for the optional but very important home inspection and choose to rely only on the FHA appraisal instead. An FHA appraisal is NOT a home inspection | more...

 
FHA Home Loan

Is A Property Eligible for an FHA Mortgage Loan If It Has Asbestos?

Borrowers interested in purchasing older properties using an FHA insured mortgage could face several challenges depending on the nature of the property. For example, some buildings insulated or otherwise constructed with asbestos products could pose a health hazard. FHA rules include minimum property requirements for safety, which address situations like these. Is a property eligible for an FHA loan if it has asbestos in it?

 
HUD

HUD Extends Modified Exterior-Only Appraisals During COVID-19

The World Heath Organization says “the worst is yet to come” with regard to the global coronavirus pandemic; the Department of Housing And Urban Development responded to COVID-19 quarantine measures in March 2020, eliminating a requirement temporarily to suspend in-person or indoor appraisal activity. Those changes temporarily meant FHA appraisals would not be subject to a requirement for in-person appraisals that might run in violation of community social distancing policies. The appraisal policy (as well as modified employment verification requiremets for certain loans). But that was all set to expire (more than once, as we’ll read below) until HUD acted to extend these measures anew. Now, with COVID-19 hot spots in the forefront of American news headlines, HUD has extended the modified appraisal guidelines (as well as employment verification rules)–they | more...