Every home buyer who obtains a mortgage needs an appraisal done. Appraisals are required by mortgage lenders to confirm the estimated valued of the subject home purchase and to protect the lender. Home buyers who have a pre-approval on a FHA loan needs an FHA appraisal on the subject property as part of the FHA mortgage underwriting and approval process. The Federal Housing Administration, FHA, requires that those seeking a FHA loan pass an FHA home appraisal to FHA appraisal guidelines. FHA appraisal guideline’ main objective and forcus is that the subject property is safe, habitable, and secure for occupancy and to validate that the property is worth the value that the home seller is selling it for and the amount that is under contract. Once the appraiser determines a value of the property, the mortgage lender will determine on how much to lend for the mortgage loan borrower based on the appraised value. An FHA appraiser will need to inspect both the exterior and interior of the subject property.
FHA Appraisal Guidelines: Exterior Of The Home
The FHA appraiser is not a home inspector. The appraiser’s role is to determine the value of the home and not inspect the home. The appraiser will take photos of the exterior and give his opinion on the condition of the exterior of the home as well as obvious deferred maintenance issues he observes. Peeling paint is not allowed. Older roofs are okay, however, there needs to have at least a 3 year lifespan left on the existing roof. Up to three layers of roofing shingles are permitted. There cannot be any cracked or broken windows. There cannot be any safety and/or security hazards. There cannot be any loose wiring and no exterior fixtures that are missing or not functional.
FHA Appraisal Guidelines: Interior Of The Home
The FHA appraiser will thoroughly go through every room of the home he is inspecting and will look to see if all mechanicals are in safe, secure, and working condition. The appraiser will look to see if all plumbing is in working order with no leaks, no running toilets, make sure a there is no sign of mold, check to see any signs of water damage, check to see if there are any signs of structural damage, check to see if all the appliances are in working order, and make sure that the home is properly ventilated. The appraiser will also check to see if all electrical and HVAC systems are up to code and in safe, secure, and working order. If the subject property has unfinished attic and/or crawl space areas, the appraiser will need to inspect that too.
Homes that were built prior to 1978 must be checked for lead based paint. Lead based paint is a potential health and environmental hazard. The interior of the home is also checked for possibility of asbestos. This can be found around insulation around the pipes. Asbestos is also a health and environmental hazard.
What If FHA Appraiser Finds Defects In The Home?
If the FHA appraiser finds defects in the home such as broken windows, loose wiring, or a garage door not working, or other items that do not meet FHA appraisal guidelines, then he will note it on the FHA appraisal. The mortgage lender will require the items to be corrected and a re-inspection by the FHA appraiser. It does not matter who pays for the repairs. It can be the home buyer or the home seller. The mortgage approval process cannot go forward until the home meets FHA appraisal guidelines and the FHA appraiser goes back to re-inspect the items in question. Once the items has been corrected, the FHA appraiser is notified and the appraiser goes back to make sure the items have been corrected and signs off on it.