If you’re looking to purchase a house but are dealing with imperfect finances, more than likely you’re looking to purchase using the programs offered by the Federal Housing Administration. Because these programs were created for people who have blights on their financial record, there is a good chance that you’ll be able to meet the loan qualifications for a federally backed loan when you may not be able to meet them for a conventional loan. That being said, not all homes on the market are necessarily FHA homes, meaning the house you want may not qualify for a federally backed loan. That is something you’ll want to keep in mind when you decide to go house hunting.
Home Appraisals: The Stamp of Approval
Whenever a home is purchased it goes through an appraisal process before the loan is approved. This is done so everybody involved with the buying and selling of the house is aware of the actual market value of the purchase before it is completed. If the home was not appraised, you would never know if you were getting the fair market value of the home or if the seller was just trying to pull the wool over your eyes. Getting a home appraised is a very important part of the home buying process. This is especially true when you’re looking through the pool of FHA homes.
A good appraiser’s job is to make sure the home you are looking to buy can meet or surpass the Federal Housing Administration guidelines for approval on a federally backed loan. If you are wondering why this government agency even cares, the answer is simple. Because government loans are given to people with imperfect finances, the lenders are taking on a higher risk. If a person purchases the home using a federally insured loan and then the home is foreclosed on, the lender is going to lose his money and the Federal Housing Administration is going to have to foot the bill. They will pay the lender and try to resell the house to make back some of the profit. If the house is not in resalable condition, there will be a problem as the money won’t be coming back in. All houses that are approved for government loans must meet the resale standards that the government has put into place
What Makes a House Qualify?
Before a house can become one of the FHA homes, it has to meet the minimum standard. Basically, the minimum standard covers safety. The home has to be safe for the inhabitants to live in, the property has to be secure, and the house/property cannot be defective in any way that would compromise the safety of those who either live in it or come onto it. This is an umbrella policy. To be a little bit more specific consider the following:
- Asbestos. This is a good one. Years ago they built houses and lined the ceilings with this chemical, only to discover later that it was toxic. So all those people that lived in it were being slowly poisoned. Asbestos is not safe and will keep a house from qualifying
- Electric. This requirement basically states that there can’t be any exposed wires in the electrical box that could cause harm to a person
- Heating. All the rooms in the house must have proper heat sources
- Roof. This one is important for you and the Federal Housing Administration as there are a few requirements for it. The roof must be able to last for two more years, it has to block moisture, and if it has been repaired previously, the roofing can’t be more than three layers deep. In addition, it will have to be replaced before approval if it is in need of repairs and already has its three layers
- Water heaters have to be up to code
- Structural. The house has to be structurally sound. If the foundation is compromised and potentially threatening, the house will more than likely fail to get approved.
- Hazards and Nuisances. This one is interesting because it can be a broad range. Hazards can include contamination such as hazardous waste nearby or polluted dirt, but the nuisances can include too much noise or the house being situated too close to a cell tower or power line. Small things that seem like they’re not a big deal, but they can add up to be a problem for you.
To gather more information on for the approval click on FHA Homes.
Other things that may affect whether your property can become one of many FHA homes can include issues with the bathroom, appliances, and accessibility to the home. The appraiser’s job is important because there are so many things that can affect approval of the home. But don’t be worried if this sounds disheartening. Remember, there are thousands of approved homes and more than 50% of all mortgages on the market are federally insured. So while there is quite a list of criteria that needs to be met, it isn’t necessarily difficult for the approval to happen.