Articles Tagged With: Home Inspection

May 10, 2016

FHA Loan Appraisal Requirements and State/Local Code

Recently we received a question in the comments section about FHA requirements for homes served by wells. The reader want to know if a “shallow well” was permitted. FHA loan rules do address an aspect of this reader question, stating that for existing construction the well must deliver a specified amount of water: “Existing wells must deliver water flow of three to five gallons per minute”. For new construction, FHA loan requirements state, “Wells must deliver water flow of five gallons per minute over at least a four-hour period”. But one thing that is very important to keep in mind is that for well water and many other appraisal issues including electrical systems, septic, plumbing and many other features, FHA requirements are not the only ones that must be observed. | more...

February 11, 2016

FHA Loan Questions: The Importance of a Home Inspection

By Joe Wallace

What is the difference between a home inspection and an FHA appraisal of a property to be purchased with an FHA mortgage loan? The appraisal is required, but not as complete as a home inspection (which is optional but vital to being a fully informed borrower). The FHA appraisal only insures the home meets MINIMUM standards and state/local building code. The confusion over FHA appraisals and home inspections is one reason why we sometimes get reader questions like the one that came in recently asking about a roof issue: “I have a question regarding our we bought in August 2014. When we 1st bought the home we were told that the roofing was fixed and replaced 3 yrs before we bought it. Well now we have leaks and mold and | more...

January 20, 2016

FHA Appraisals: A Reader Question

By Joe Wallace

A reader got in touch recently to ask about an FHA appraisal. “…septic system…was discovered bad after closed on and moved in. The home had been for sale for over a year and unoccupied for 6-8 months. FHA appraisal didn’t do any inspection of this system and it appears they should have due to the length of time it hadn’t sold or been unoccupied. It has been replaced and trying to be compensated for the expense. Thoughts?” It’s very important for all borrowers to understand that an FHA appraisal is NOT a home inspection. Once complete, the FHA appraisal should not be taken as any sort of stamp of approval from the FHA that a home is free of defects. Borrowers should ALWAYS pay for the optional (but extremely important) | more...

December 8, 2015

FHA Mortgage Loans and Home Inspections

By Joe Wallace

When you buy a home with an FHA mortgage, there is a process known as a appraisal that must happen prior to loan approval. An FHA appraisal involves a professional who reviews the property to insure it meets FHA minimum standards for safety, economic viability, and livability. Some mistake the FHA appraisal process for a home inspection, but the FHA and HUD are quick to point out that the appraisal is NOT a complete, top-to-bottom review of the home. We get comments and questions about this process in our comments section, and many of them have a familiar theme. Consider this recent reader comment: “…it boggles my mind how I could have bought my home 5 short months ago with an FHA loan and found out that it was infested | more...

July 28, 2015

FHA Loans, Foundation Trouble, And Home Inspections

By Joe Wallace

A reader got in touch with us to ask about a situation where a home with foundation problems was purchased with an FHA loan. The reader says a home inspector was not hired because the foundation issue was “supposed to be taken care of” prior to the borrower moving in. Later, the borrower discovered that no corrections to the foundation had been made and further problems were discovered. The main question was whether or not the borrower has any legal recourse in situations like these. FHA loan rules and the FHA/HUD official site are very specific when it comes to borrowers who rely on FHA appraisals and their outcomes instead of hiring a home inspector to take a more in-depth look at the property. The FHA appraisal is not a | more...

May 14, 2015

The FHA Appraisal Is Not A Home Inspection

By Joe Wallace

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” | more...

April 3, 2015

Is A Home Ever “FHA Approved”?

By Joe Wallace

A reader got in touch with us recently with a set of complaints about a home that was purchased using an FHA mortgage. The reader says, in part: “Please note that we have a home that was approved by FHA & Hud that has turned out to be a disaster. We have been through two of the programs to show that this house cannot be repaired with out costing more to repair than replaced…The people that was looking after us just laughed in the back ground as we talked to them and always adding another 4 or 5 thousand balance to our loan. In 2011 & 2012 We tried to repaid this house after being assured by FHA and Hud that it would be fine if just repaired in a | more...

March 17, 2015

FHA Loan Appraisals and Home Inspections

By Joe Wallace

A reader asks, “Just bought a home and while in crawl space installing drain tile I realized the main sewer line was leaking. The house was unoccupied for 2 years prior to purchase. I have an FHA loan and cannot afford to have contaminated soil removed and line repaired. I realize that I made a mistake buying this home but I felt protected from major issues in getting an FHA loan. What can I do?” The most important question in this situation is whether the borrower paid for a home inspection prior to purchase. It can be tempting for borrowers to rely on the appraisal alone to catch problems or issues with a house, but it’s never a good idea to do so. Why? FHA loan rules are clear–the FHA | more...

February 11, 2015

FHA Loan Reader Questions: Buying A Home “Under False Pretenses”?

By Joe Wallace

A reader asks, “I was trying to get answers on what to do if you have brought an house under false pretenses… There’s alot of issues with the house that wasn’t disclosed in the property disclosure form.” FHA home loans require an appraisal as a condition of loan approval. The appraisal establishes the fair market value of the home, but it also insures the home for sale meets FHA minimum property requirements. However, passing the FHA appraisal process is not a stamp of approval from the FHA nor is it a guarantee that a home is free from defects. Borrowers are strongly encouraged by the FHA and by real estate experts to pay for a home inspection prior to committing to the sale of a property. The home inspection, when | more...

May 8, 2012

FHA Appraisal Questions and Answers

By Joe Wallace

There are many frequently asked questions about FHA appraisals, and while this is not meant to be an exhaustive list of answers, we do cover some of the most common questions here: Am I required to get an appraisal for an FHA home loan? The FHA rules say all properties to be purchased with an FHA mortgage must be appraised by an FHA appraiser. There is only one type of exception–the FHA rules permit “certain streamline refinance transactions” to be processed without an appraisal. It’s important to remember that a lender is free to require an appraisal even when the FHA does not require one. What is the FHA policy on reusing appraisals? The official word on this subject is found in the HUD publication 4155.2. The section titled “FHA | more...