Articles Tagged With: FHA Appraisals

July 14, 2022

HUD Announces Appraisal Update

The Department of Housing and Urban Development official site contains an FHA Mortgagee Letter published on July 12, 2022, which announces an important update to FHA appraisal policy. FHA loan rules as published in HUD 4000.1, include a maximum age for an appraisal. If an appraisal is about to expire, FHA rules permit an extension of the appraisal validity period for 30 additional days. In some cases, an appraisal update may be permitted but that update must typically be accomplished before the original appraisal expires. Now, FHA appraisal guidelines have been revised to expand the appraisal validity period, which the FHA and HUD say will reduce “financial burdens” of getting appraisal updates. The changes are also meant to help the agency “more closely align” the FHA loan program’s initial appraisal | more...

May 19, 2022

Appraisals, Home Inspection, And The Systems Of Your House

By Joe Wallace

We write a great deal about not using the FHA appraisal to determine the condition of the home you want to buy with an FHA mortgage. But why do we say this? Why can’t you trust the appraisal alone? Why pay for the home inspection? There are important reasons for homebuyers to pay for a home inspection as well as the appraisal. Here are some things you should think about before you decide to skip a home inspection. The Foundation of Your Potential New Home Your FHA appraiser is not required to be an expert in areas such as the foundation of the home. Some foundation problems may not be apparent in the appraisal process. They may only be revealed during a home inspection depending on the problem. The appraiser | more...

May 4, 2022

FHA Appraisals: Facts You Should Know

By Joe Wallace

Some FHA borrowers wonder about how the appraisal works. It’s a process that can seem a bit mysterious until you understand the hows and whys. What do you need to know about FHA appraisals to help you make the most informed choices about a particular home? FHA Appraisal Facts: The Appraisal Is A Tool For Your Lender, Not For You Appraisals help the lender make sure the home meets the bare minimum standard for safety and habitability. It also helps the participating FHA lender establish the fair market value of the home. It is not a tool for the borrower in any way except to provide the dollar amount for the market value. FHA Appraisal Facts: Standards Vary What applies in one housing market may not apply in another. By | more...

April 12, 2022

5 things to know about FHA Appraisals

By Joe Wallace

What do you need to know about FHA appraisals? There are plenty of details to be concerned with depending on the nature of the property you want to buy but some issues loom larger than others. FHA Appraisals Are Not Home Inspections That’s an obvious one. The FHA appraisal is meant as a tool for the lender and not the borrower. What’s not so obvious? The appraisal process does not require the appraiser to be an expert in all systems of the home. That means your roof may have problems the appraiser can’t identify, or the HVAC system might be experiencing symptoms unfamiliar to your appraiser. In some cases, the appraiser might not even set foot inside a building to be appraised. It’s not so hard to understand why you | more...

March 7, 2022

Answers To New House Hunter Questions

By Bruce Reichstein

What does it take to qualify for an FHA mortgage? That’s among the most common questions asked about FHA home loans. What is the answer? There are a variety of factors that go into your loan officer’s decision to approve or deny a home loan. Those factors include the number and amount of your monthly financial obligations, your FICO scores, how well you use the credit you have, and other variables. What credit score do you need to qualify? On paper, FHA loan rules say those with FICO scores in the 580 or above range qualify for the lowest down payment possible for an FHA mortgage (3.5%). Lender standards may require a higher FICO score range. Not all borrowers have the same kind of FICO scores. Some may have thin | more...

March 1, 2022

FHA Appraisals: What To Remember

By Bruce Reichstein

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...

December 15, 2021

FHA Home Loans: Not All Are “Typical” Mortgages

By Bruce Reichstein

Not every home loan application is a typical one. You might be trying to buy a home that doesn’t meet FHA loan appraisal requirements–if you try to apply with a new purchase loan you might not be approved in such cases. But if you are buying a fixer-upper home with an FHA rehabilitation loan you won’t be required to have the home pass the appraisal when the loan closes but you are required to bring it up to minimum standards as a condition of loan approval. See how choosing the right FHA mortgage can make the difference sometimes between loan approval and loan denial? There are plenty of unique situations a lender might encounter–one of them could be yours. For example, are you trying to refinance a home you inherited? | more...

December 10, 2021

Appraisals Vs. Home Inspections: What You Need To Know

By Joe Wallace

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...

November 19, 2021

Updated FHA Appraisal Rules

By Joe Wallace

The Federal Housing Administration has issued a set of revised instructions for FHA appraisals that’s meant to bring the process more fully in line with the Fair Housing Act. What kind of changes? We’ve discussed the basics in a previous article, but the specifics required include modifications to HUD 4000.1, the FHA Single Family Lender’s Handbook. One big change is an entry in a new section called Appraiser Conduct, which includes the following instruction; the appraiser is required to be competent, independent, and objective. But the appraiser must also NOT: • Discriminate in “developing any part of the appraisal or value conclusion based on characteristics that are protected by federal, state, or local laws”; • Misrepresent “the scope of work performed in the completion of the FHA appraisal”; • Develop | more...

November 18, 2021

HUD Updates Appraisal Guidelines

By Bruce Reichstein

The FHA and HUD are updating appraisal requirements for residential mortgage loans guaranteed by the Federal Housing Administration. In June of 2021, President Joe Biden announced a move to bring appraisals into compliance with Fair Housing Act guidelines–the move was introduced as an effort called the Interagency Task Force on Property Appraisal and Valuation Equity or PAVE. The FHA has issued guidelines that reinforce and clarify the “existing requirements for Appraisers and Mortgagees regarding compliance with Fair Housing laws” related to the appraisal of properties that will serve as security for FHA-insured mortgages. What kind of guidelines? A Mortgagee Letter published at HUD.gov states that the federal agency “expects all parties engaged in FHA mortgage insurance programs to eliminate all considerations of race, color, national origin, religion, sex, familial status, | more...