What You Need To Know When Getting A FHA Loan and FHA Appraisal
Get Ready To Fix All Safety Hazards
An FHA Loan is a mortgage backed by the Federal Housing Administration (FHA). This means that the government insures the loan providing less risk for the mortgage lender in case the mortgage goes into default.
If you are currently looking at refinancing your home with a FHA Loan, you will need to keep a few things in mind when getting your FHA appraisal.
Your appraisal will have to be completed by a special FHA approved appraiser. This approved appraiser will look at all the factors a regular appraisal would require but takes a more in depth look at any risk, health and safety issues of the home.
Here are some key inspection areas required by HUD:
•Above all, the home must be habitable and comfortable, without any potential hazards to the occupant.
•The lot should be graded to allow water to drain away from the home.
•All bedrooms should have an exit to the exterior of the home.
•Many homes built before 1978 still contain lead-based paint, which is a potential health hazard. In these homes, the appraiser will check for damaged paint (peeling, chipping, etc.). Such conditions must be corrected before the loan will go through.
•All steps and stairways must have a handrail for safety. This is a common area of correction.
•The heating system must be sufficient to create “healthful and comfortable living conditions” inside the home.
•The roof should be in a good state of repair and must keep moisture from entering the home.
•The foundation should be in good repair and able to withstand “all normal loads imposed” on it.
According to HUD Handbook 4150.2, the home “must be free of all known hazards and adverse conditions that may affect the health and safety of the occupants.”
As an appraiser the things we find most often in need of repair before the loan can be approved are:
Peeling paint Cracked or Broken Windows Missing Stairs/Banister/Handrail
Inadequate window size in basement to allow for emergency exit
*Note to the homeowner – If you have any of these needed repairs, it is a good idea to fix it prior to the appraisal. That way your appraisal will be marked as is and you will avoid any additional appraisal costs for additional inspections and reports.
The main thing to remember is, if something in the home poses a threat to the health and safety of the occupant, or to the structure itself, the appraisal will probably be marked “subject to repair”. The homeowner will then have a chance to repair the deficiencies. If the homeowner chooses not to complete the repairs the loan will not be approved.