How FHA Appraisal Guidelines Have Changed

FHA is a great option for many people who either want to buy a home, or if they want to refinance their current loan. Families can refinance their current loan to an FHA loan no matter where they got it. There are some FHA appraisal guidelines that you might want to be familiar with so that you understand what to expect.

FHA appraisal guidelines were implemented to not only protect the borrower but to protect the Federal Housing Administration. The reason behind this is because they didn't want any borrower to go into a home that was extremely faulty, and they were hesitant to insure a loan on a home that had significant damage. The FHA appraisal guidelines were very stringent, but in 2005 the FHA appraisal guidelines were given some slack. This is when the FHA appraisal guidelines where allowed to be written "AS IS", meaning that the property could be deemed as an okay place to buy if it had some minor damage.

The FHA appraisal guidelines stated then, that the appraisal needs to be done by an FHA approved appraiser, and this is still the case today. There is a list that the lender will have to choose from for your appraisal. In addition, there was a cost to cure if any major work needed to be done. Now, the FHA appraisal guidelines state that only cosmetic defects need to be fixed, but in the case that there is normal wear and tear that must be fixed too.

FHA appraisal guidelines take great steps to make sure that anyone who is involved with the loan, or is involved in the process of writing the loan is unable to produce an appraisal. Obviously, this would be a huge conflict of interest. FHA appraisal guidelines also state that anyone who refuses to follow the guidelines will no longer be able to participate in the FHA loan program. This is what lenders will refer to as "Absolute lines of independence".

FHA appraisal guidelines are implemented to ensure that things are being done correctly, and that no stone goes unturned. While some may not see the importance, FHA does since they are actually backing these loans. They require that the FHA Connection database is used in order to verify the appraiser being used, and the name on the report must match exactly as it is in the system.

The lender does have the ability to request a second appraisal however; they do require that the second appraisal does appear in the lender's file. Both appraisals must be in the file so that they can be reviewed and compared to each other. Most importantly, FHA appraisal guidelines state that "appraiser shopping" isn't allowed. This method is what caused huge problems over the past few years when appraisers were being asked to estimate a value on the property first before submitting the appraisal order. This will ensure that things are done properly, and that the appraisal value won't be given just to make a loan pass through. For more information on this, you can visit www.fhaloansnow.net.