Do you know what the Federal Housing Administration’s role in a residential appraisal and mortgage loans is? The Federal Housing Administration (FHA) is a government agency in the United States that is responsible for insuring loans sanctioned by banks and other private lenders for purchasing homes and even building new ones. FHA aims to enhance the housing standards and conditions of a residential area, offer an adequate home financing system by insuring the mortgage loans, and stabilizing the mortgage market. This outstanding system is run by the Department of Housing and Urban Development in the United States.
If you intend to receive financial help for your mortgage loan from FHA, your home must clear the FHA appraisal first. This appraisal will determine the amount of mortgage you can obtain as well as ensure that your desired home in safe and sound for you to reside in it. There are certain requirements for FHA residential appraisals that need to be considered when approaching FHA for finances. Here is the list of requirements that FHA residential appraisal require before considering your home eligible to finance its mortgage loan.
Value estimate requirements: In order to fulfill this requirement, the FHA appraiser will come up with an approximate value of your choice of home. First of all, the appraiser will find out three to five similar homes that have been sold in the same locality, where your desired home is located, and that have been sold in the last year. By considering the sales figures of these homes and by making the necessary adjustments, the residential appraiser will come up with the appraised value of the home that you intend to purchase. This value or the actual sales rate, whichever is lesser, will be instrumental in determining mortgage value of your home.
Structural requirements: The FHA even wishes to ensure that your home is structurally safe, for yours, as well as for the lender’s benefits. The FHA appraiser personally inspects and sanctions the physical condition of your desired home. The appraiser will include floor, roof, ceilings, walls, doorways, and attic in his inspection, just like a New Jersey property appraiser does. If there is any basement or crawl space instead of attic space, the appraiser will specifically inspect it also. Defects and signs of serious issues such as water leakage, warping of surfaces, or bad cracks may require repairs prior to a mortgage approval. Apart from these, the doors and windows need to be in a working state and proper condition.
Infrastructural requirements: Infrastructural requirements are one of the crucial FHA residential appraisal requirements. Generally, the infrastructure of a home comprise things such as plumbing and water supply, heating and ventilation, the electrical system and essential tools and equipment, including piping and outlets for natural gas. The FHA appraiser needs to verify whether all these aspects are in proper working order by checking electrical wiring, lighting, electrical outlets, fuses and circuit breaker boxes, sinks, toilets, heating systems, and the water heater. The infrastructural requirements do not include any movable appliances such as ovens and refrigerators. If your choice of home includes a private water well or septic system, these systems would also need to have approval from the appraiser.
Additional requirements: Apart from these, the FHA appraiser will inspect your home for health and environmental issues. The valuator will perform an inspection for the signs of rodent infestation that includes rats, mice, and squirrels. If the house is constructed before 1978, a thorough inspection for lead paint or asbestos will be carried out in order to identify health or environmental issues if they exist. In case these kinds of issues are found, the necessary repair or removal is imperative for the mortgage approval. Also, any kind of environmental issue such as the desired home being quite close to a chemical factory or a waste site can cause major problems for FHA approval.
If all these FHA residential appraisal requirements are fulfilled, FHA can help you to finance mortgage loans fairly and easily.