All about FHA Appraisals
Whether you are a first time home buyer or a repeat buyer, home financing is a major aspect of home buying. There are many home loan options available, all are not equal. If you are looking for an affordable home loan which allows you to buy almost any kind of property at reasonable terms, you need to consider FHA home loans.
FHA home loans offer better lending terms and conditions compared to traditional and conventional home loan programs and are best suited for people with low to moderate income. While it is true that qualifying for FHA loans is very easy, you must remember that the property you are willing to buy must meet all the FHA appraisal guidelines to be eligible under FHA home loan program.
FHA Appraisal and Guidelines
If you are considering FHA home loans, the property to be financed needs to be inspected and appraised by a HUD-approved home appraiser. The appraiser would determine the current market value of the property based on various factors and also check whether the property is in compliance with all the HUD’s minimum property standards. The appraisal report will also include the repairs that need to be done to get the FHA home loan approved.
The main two concerns associated with FHA appraisal is Safety and Soundness of the property. The appraisers need to mention about the safety, soundness and structural integrity of the property so that no harm is caused to the inhabitants. Based on this report the underwriter would decide whether or not approve the loan application.
According to FHA appraisal guidelines 2015, all the properties to be financed by FHA need to be appraised by licensed, HUD-approved residential appraiser and the appraiser must ensure to:
- Carry out a visual inspection property from the inside as well as outside
- Photos of the property to be taken and attached to the loan file. The front, sides and rear part of the property must be visible in the photos. If there are other value-adding improvements like the pool, patio, etc, they need to be photographed as well.
- Each comparable sale transaction must also be photographed to support the appraisal.
- Provide a street map showing the exact location of the property to be financed along with all other comparable sales which were used during the appraisal.
- In case of a proposed construction, photos showing the grade of the lot must be provided.
What do Appraisers Look for in a Property to be Financed by FHA Home Loans
To get an FHA loan approved you must ensure that the property meets all the minimum property standards. When your property undergoes an appraisal, the inspector will focus on the condition of the roof, foundation of the property, ventilation, lot grade, electricity, etc. some of the key inspection areas include:
- Most of the appraisal checkpoints are about the health and safety elements of the property. The property must be structurally or environmentally be habitable and comfortable for the home buyers, without any potential hazards.
- The lot should be graded in a way so that it does not retain moisture which can damage the foundation of the home or building.
- The exit point should be easily accessible from the bedrooms.
- Home containing lead paints will be checked for peeling, chipping, etc since it can cause lead poisoning. If such issues exist, they should be repaired to get the loan approved.
- Steps and stairways should be provided with handrails for safety.
- The heating system should be in good working condition to make the home comfortable for living.
- The roof should be in good condition and should not allow moisture to enter the house.
- The foundation should also be good enough to withstand all the loads.
Unlike the appraisers of conventional home loans whose sole intention is to determine the current market value of the property, the appraisers of FHA would determine the current market value, along with inspecting the property for its safety and soundness to ensure the home buyer and his family lives securely.
To know more about the FHA appraisal process, get in touch with FHA Home Loan Group soon!