Are you planning on getting an FHA loan with an intention to buy your dream house? It may sound easy to you, but there are a few steps performed by an appraiser with the aim of making sure that the property you want to finance is in line with the standards issued by HUD. The appraiser will also ascertain the current value of the property so that all of the requirements of “FHA Appraisal” can be met without getting you into any problem, right in accordance with the current policies, guidelines directed by the FHA and HUD. But, still, you should ask yourself certain questions. Is your house meeting all safety standards? Is there a possibility to increase the value of your house?
Before you get the house appraised or inspected by a professional appraiser, we highly suggest you make sure that the house is as valued as it should be.
What is an FHA Appraisal?
Do you get yourself scratching your head every time you bring up the idea of FHA Appraisal? Perhaps, the reason why you went astray is that you have been banking upon some unreliable sources. However, with our experts, you won’t be feeling lost anymore as we have narrowed it all down for you to understand in an easy manner.
During an FHA Appraisal, an Appraiser (a professional) comes to the house with an aim to assess its value (how much it is worth) so that he can decide the market value of the house being purchased. The appraisers are highly specialized in what they do.
During the inspection, not only will the Appraiser will inspect the “Subject” house but may also evaluate others in the vicinity so as to have a comparison between both for the value assessment. A detailed report will be written by this expert and it will include a probable value of the house. Afterward, this report will be handed over to the mortgage lender for final review and further action.
Some homebuyers get some nasty reaction from an FHA appraiser during financing a home purchase with the assistance of an FHA loan just because they miss out on meeting the guidelines and other requirements that it takes for them to make a successful purchase. The HUD established some property standards that every FHA appraiser must keep in mind while inspecting the property. These standards outline “Safety”, “Security”, and “Soundness”.
How is “FHA Appraisal” different from other Appraisals?
Getting your property appraised by an FHA expert is mandatory. Therefore, you should also comprehend the difference there are between “FHA Appraisal” and a “Regular” Appraisal.
Both “FHA” and “Regular” appraisals are poles apart. An appraiser from a regular administration will only look up the property or house just for the sake of knowing its worth – value, whereas, an FHA appraiser will do more than what meets the eye.
Regular Appraisal (Conventional): When a conventional appraisal takes place and you intend to buy a house on other than an FHA loan, then the appraiser only focuses on the value of the property. So, when he visits the house, his main motive is about how much the property is worth.
FHA Appraisal: However, on the flip side of “Regular”, the FHA appraiser (on behalf of Department of Housing and Urban Development (HUD)), in addition to the value inspection, will also make sure that the property is “Safe” and “Secure”. So, not only does an FHA appraiser ensure the market value of the property, but also he considers the safety and security of the property to meet HUD’s standards.
So, did you get the picture? This is why FHA is considered more “Unique” when it comes to the end-to-end procedure of inspecting a property. Read about FHA loan limits to find out more about it.
When it comes to the differences between both of the services, the FHA operates it with a next-level approach for an ultimate inspection of the property.
Why FHA Appraisal?
You may be wondering why the HUD-approved appraiser is the inspector you might want to use for the purchase. Well, there are many reasons why you could consider it. However, look for the best-fit after reviewing each service underneath:
In addition to giving more safe, secure and sound features, consider FHA for the following:
- Though FHA is costly, it guarantees to provide you with more protection for sure. You will feel the most content person because all of the work will be handled by the HUD-approved appraiser.
- The prime motive of an appraiser approved by HUD or from FHA is that he will make sure that everything in the house is working exactly as it should. So, unless things are as good as they could get, the seller must fix all of the issues before the closing. Otherwise, the property will be indicated by the seller as “Subject to” just because the repairs are to be completed yet.
Hence, the appraisal through FHA will give you peace of mind, keeping you at ease at all times. Before the loan is financed, all issues need to go away and this is what an FHA appraiser will give you the satisfaction of.
How much does FHA Appraisal Cost?
So, how do you think an FHA Appraisal will cost you whether you are a first-time buyer or not? Remember, the person who buys the property will have to pay for the appraisal upfront.
According to URAR, the appraisal costs range between $300 and $500 and the Home Appraisal may not be required if you have applied for an FHA Streamline Refinance. But, HUD highly suggests that you should do it.
What factors impact the cost of an FHA Appraisal?
Do you think that the appraiser is asking you for more money than you think you should give? Perhaps, you are not mindful of the factors that may have an influence on the overall cost charged for the appraisal.
Here’re the factors that affect the cost of an Appraisal:
- Type of Property
- Square Footage of Property
- Total land included in the Property
- Damage and Repairs to be completed
- Who is doing an appraisal? An Individual or Company?
There could be other elements too that could affect the pricing model of the service. For that reason, we suggest you have a look at the FHA’s website to find out more about it.
FHA Appraisal Checklist
For a smooth experience of an FHA Assessment, the property must comply with the rules of HUD’s Minimum Property Standards. To get the full checklist that is proved valid with the current year, viz. 2019, please see the “Requirements” section on this page below.
Hence, all appraisers, in order to meet conditions mentioned in HUD Handbook 4150.2, have to satisfy the following Checklist which is as follows:
An FHA appraiser must:
- Verify that the house is a complete in-demand property.
- Make sure that the property is having an adequate heating system.
- Ensure that the property is clear of any lead-based paints.
- Inspect that there is no visible electric wiring.
- Examine that all walls are undamaged
- Foresee that there are no hazards in the house or property
- Check that the property is built through a high-quality construction
- See that roofs are of top quality and not in need of any repair
- Ensure that home is publicly accessed by anyone easily
- Confirm that there is a facility of safe and pure drinking water
- Verify that Gas, Sewage, Water and all electric utilities are available
Up till now, there would have been changes to the “Appraisal Checklist”, therefore, it is a good idea to be mindful of the current year (2019) Checklist and Guidelines in order to be up-to-the-minute.
FHA Appraisal Guidelines 2019
Since we are living in 2019, the guidelines have to be modernized as well. What these guidelines state is that all of the properties that you purchase with an FHA-insured mortgage loan needs to be appraised by an authorized, HUD-approved appraiser.
For this action, the following steps must be taken into account by the appraiser:
- Review the subject property both from the inner side and outer side visually.
- Take photographs of the house that is to be included with the loan file. All sides of the property in the photos like the front, rear, right, and left must be clearly shown.
- If there is a value-adding improvement, it needs to be photographed as well and then attached.
- Each comparable transaction that is being used to support the appraisal should be taken into photos by the appraiser.
- A copy of the street map and the location of the property, each comparable sale, or “comp” should be obtained during the assessment.
- If the place is a proposed construction, the grade of the lot must be shown in the photos.
These are the FHA Guidelines that an FHA appraiser must, anyhow, perform during the appraisal process.
FHA Appraisal Requirements
What does an FHA appraiser look for during the whole procedure of getting a house for you to live in? Many areas are covered by the appraiser during the process that outlines the safety and security of the buyer who will reside in the house after buying it.
So, an Appraiser looks for places like crawl spaces, electricity, heating, mechanical system, ventilation, lot grade, foundation, roof, and other related areas.
The following areas are required to be inspected by HUD:
- The main concern of HUD is that the buyer lives in the house more safely and securely. The appraiser will make sure that all of the systems are working like a charm, keeping the buyer super comfort like never before. He also makes sure that there are no hazards available in the property.
- The lot needs to be arranged in a way that no moisture passes through the entrance of the basement. Furthermore, there needs to be a slope to let the water drain away from the property.
- In order to prevent fire accidents, all bedrooms should have an egress so as to prevent fire causes. A large window in the bedroom will be sufficient.
- Most of the houses that were constructed earlier than 1978 used lead-based paint which could be a potential hazard. The appraiser will make sure that there is not an issue regarding the paint and verify that there is no damaged paint. Before the loan goes through, all conditions must be met.
- In order for safety, all stairways must be having a handrail. This is the difference that any appraiser will know at first sight during FHA appraisals.
- The appraiser will also verify that the house does not have any kind of heating problems so that you could have a happy and healthy life.
- There must not be any repair required in the roof – it must be in a very good condition. The appraiser will make sure that the roof is free from the moisture.
Is that all? Not really! There are other special FHA Appraisal Guidelines that you can find in the “HUD Handbook 4150.2” in order to get a peace of mind for the safety and the well-being of the residents.
But what if the house does not meet the requirements and possibly poses a hazard to the well-being of the resident? What if there are issued with the home or property? Well, in this case, the property will be marked as “Subject to repair” and must be fixed before the FHA loan goes through.
Willing to have a complete list of the “Guidelines” or “Requirements”? Please reach out to the authorized web portal of HUD at hud.gov and be at ease. If you have any questions or queries regarding the FHA Appraisal, feel free to stay in touch with our experts to help you in this regard.
FHA Repairs – What is Next?
There are hearsays about the FHA Appraisals that they are unreasonably strict about the rules when it comes to repairs of the property. People think that this will decrease the chance of getting an FHA loan if the property is not in line with the health and safety aspects. That is not true! You can correct most of the discrepancies after the “Inspection” has taken place. The appraisal process of FHA has been smooth in the past years and therefore, you have got a chance to make repairs.
On the other hand, there are some issues that are not easily recoverable, for example, a bedroom with no doors or windows. We know that it will increase the probability of a fire event which is a serious hazard to the safety and soundness of the occupant. Like this, there are other discrepancies that cannot be fixed straightforwardly. This is some that will send the appraising party i.e. FHA off the track.
Hope you have got your head around the “FHA Appraisal 2019”, its Cost, Requirements, Checklist, and other vital guidelines, haven’t you? If you still have got questions with regard to getting an FHA loan or knowing how to get ready for the Appraisal, don’t hesitate to ask us for help. You know we will be pretty much help and we will be happy too.