When you obtain a mortgage, either to purchase a new home or refinance an existing home, an appraisal is required. For FHA Home Loans, appraisers must evaluate property safety conditions and ensure that they comply with HUD standards. Here are some important things that you should know about preparing for FHA appraisals.
Appraisers must report any “property deficiencies” or “adverse conditions” that they observe at a property. What are these? Here are a few examples:
- Issues with the Structure or Foundation of a Home
- Leaks (Plumbing, Roof, etc.)
- Pest Infestations (i.e. termites)
- Peeling Paint
- Signs of Severe Water Damage
- Exposed or Defective Electrical Wiring
- Environmental Hazards
- Missing Handrails
- Garage Door Openers without Functioning Safety Mechanisms (Auto-reverse with pressure, motion sensor)
- Other Safety Concerns
- Defective Appliances
- Improperly Functioning Windows/Doors
Result of Identified Issues
Any issues identified by an appraiser must be fixed prior to closing (unless using an FHA Rehab loan, in which case, other steps must be followed). Otherwise, the property will not be eligible for FHA financing. Typically, an appraiser must return to the property for re-inspection to confirm that the repairs were made. In some some cases, an appraiser will accept a photo of the repairs in lieu of a second visit.
Advice for Homeowners
If you are looking to sell or refinance your home, preparing for FHA appraisals is a good idea. FHA is a very popular type of financing used by many first time buyers. Taking care of repairs before they are identified by an appraiser will eliminate potential delays. For additional information on FHA and other types of financing, give me a call!