FHA Mortgage Appraisal Standards

A mortgage appraisal is the last line of defense for a lender. The mortgage lender must know that the value of the home is accurate in order to make the proper decision whether to grant the mortgage to the borrower or not. Moreover the mortgage lender must know not only is the value there, but that the quality is there as well in case they have to foreclose on the home and sell it themselves to recoup the amount due on the mortgage loan.

Since FHA mortgage loans are insured by the government they have even higher-mortgage appraisal standards for the mortgage loans that they insure. They call them the FHA Minimum Appraisal Standards and are required to be met on every mortgage that is insured by FHA. These standards help to insure the marketability and quick sale of a home in the case of foreclosure. In addition, they offer the protection of value and quality for the borrower obtaining the FHA mortgage to buy the home.

There are three basic categories of minimum appraisal standards that must be met for any mortgage insured by FHA. The first one is the soundness of the home. It should be constructed in such a manner that the home’s structural integrity is intact and will be for the expected life of the home. It should not have any items that detract from its’ structural integrity such as foundation or roof issues.

The second item is also addressed here as the structural integrity should protect the security of the property.  It should be in a condition to protect the value of the home or the security of the investment made by the mortgage lender which is insured by FHA.

Lastly there is the safety oft the home for the occupants. All rooms in the home must have a fully-functional heat source. The electrical and plumbing in the home should be up to code and in good working order. The roof must have at least two years of life and keep out moisture. There should be no termite damage.  The foundation must be sound with no settlement issues. Cosmetic items are not required to be repaired.

The bottom line is that an FHA appraisal is more stringent which benefits both the mortgage lender and the borrower to insure the value of the home is accurate and intact.

 

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