People buying or refinancing a home with an FHA loan can save themselves time and possibly money by completing the checklist below prior to ordering an appraisal. It was created based off the Property Acceptability Criteria for FHA mortgage insurance that is found in the FHA Single Family Housing Policy Handbook.
Since the Department of Housing and Urban Development “requires every property to be safe, sound, and secure to be eligible for FHA insurance,” according to the Handbook, appraisers have strict guidelines to follow. “FHA Roster appraisers must report all readily observable property deficiencies, as well as any adverse conditions…”
When structures have defective conditions and fail to meet Minimum Property Requirements and Minimum Property Standards, it can mean reinspections, delays and possible denials from a mortgage underwriter, who ultimately will “determine which repairs for existing properties must be made for the property to be eligible for FHA-insured financing.”
Examples of defective conditions — which appraisers must take photos of — include, “Defective construction, evidence of continuing settlement, excessive dampness, leakage, decay, termites, environmental hazards, or other conditions affecting the health and safety of occupants, collateral security or structural soundness of the dwelling must render the property ineligible until the defects or conditions have been remedied and the probability of further damage eliminated,” according to the Handbook.
Each time appraisers have to return to a property to make sure defective conditions have been fixed, it costs borrowers. So while repairs are unrequired before an inspection, being proactive could save a lot of money in reinspection fees.
Make sure you bookmark this page so you can use this it for any future properties you plan to buy with an FHA loan.
Get your FREE checklist here: fha-pre-appraisal-checklist