|Once you have found the home you wish to
purchase or you have decided to refinance, FHA will want to know that the house is worth
the price you pay or the value indicated.
The FHA loan amount
that the lender approves for you will be based on the appraised value of the property or
the sales price, the lower of the two. Under FHA loan guidelines, you may obtain a FHA
mortgage loan up to 98.15% of the property appraisal value.
The value of the property is a lender's best assurance that they can
recover the money they lend, even if you stop making house payments. If you stop making
payments, the lender has the right to sell your home to pay off the loan - this process is
The lender wants to insure that the property could be sold at a
price that's worth the loan amount. Also, should you decide to sell your home before you
have finished paying off your mortgage loan, you'll also want to sell the house for a
price that allows you to pay off the remaining loan balance and perhaps make a
profit as well.
That's why FHA allows only FHA approved licensed appraisers to
appraise of the value of your home. We will require a professional appraisal of the
home you choose to buy before the loan amount for your mortgage is finalized.
The appraiser will check for required FHA items to insure that the
property does not contain any health or safety issue. FHA does not guarantee the condition
of the property at the time of purchase and borrowers are suggested to obtain a home
inspection report. Learn what a FHA appraiser must look for by viewing the actual form
they must complete by clicking >> Here
In order to determine value, the appraiser must typically use the
3-5 most recent sales within a 1 mile radius of the subject property, that have sold
within the last 12 months. The properties should be approximately the same size, with the
same bedroom and bathroom count.
The appraiser will look at all of the properties an make adjustments
to the sales prices based on the differences in size, condition, location, bedrooms,
bathrooms, pools, etc. Based on an averaged of all of the properties with their price
adjustments, the appraiser will then arrive at a value of the home.
Learn about some of the possible delays other than the appraisal
that may take place during you transaction by clicking Here.