FHA is a wonderful program for first-time home owners. Essentially, they are really in the home owner’s corner when it comes to your home. The U.S. Department of Housing and Urban Development uses the FHA Single Family Housing Policy Handbook 4000.1(latest edition to date) and sets guidelines as to what is required for a home to be eligible for an FHA transaction (whether sale or refinancing).
Here are somethings to be mindful of when working with FHA.
Ex1. I am selling my house and one offer is from a buyer that has FHA financing and another is conventional. Is one better than the other?
The only real difference from your buyers is the FHA requirements. Both means of financing (assumed they are pre-qualified) are going to be able to process the transaction. The concerns may be with FHA though, if for say you have peeling paint, missing hand railings, No GFI electrical outlets in the bathrooms or kitchens, or broken windows. That is not an exhaustive list but it illustrates some items an appraiser will have to ensure are up to “FHA code” before financing eligibility.
If your home is older and you want to avoid these things, remember that FHA just wants to confirm the house is safe. You may want to bring your home up to their standard anyhow as it will allow for more buyers to compete for your home.
Ex2. The appraiser who came out to my house for my appraisal sent the lender a list of a few items that needed to be fixed. Now my lending is delayed. Is there anyway to expedite this?
When you are working with FHA financing, you do need your home to adhere to the policy handbook. It is very often hind-sight that we wish we remedied the damages/repairs prior to the appraiser doing their inspection. The best way to correct these items is to complete the repair list and contact your lender immediately upon finishing the repairs.
To briefly summarize, some home-owners feel that they are at the mercy of an appraiser that notes the littlest ‘things’ that need repairing to a home. Although it may seem tedious. FHA guidelines are very stringent and appraiser’s ethical standards are to uphold their guidelines. If you are a homeowner with FHA financing and you are considering refinancing, review the FHA policy handbook and familiarize yourself with what is to be expected.
