OnQFinancial writes this article on clearing the fog of confusion when it comes to whether FHA needs a home inspection or an appraisal. Read on to know more.
FHA doesn’t need a home inspection, only appraisal
The FHA loan program is handled by the HUD or the Department of Housing and Urban Development. HUD sets all the rules and guidelines for this loan program.
- The HUD doesn’t need the FHA borrower to conduct a home inspection.
- But HUD does need an appraisal to be accomplished by an approved home appraiser. The main purpose of the appraisal is to ascertain the existing market value of home for lending the property.
- Moreover, the appraiser also conducts a basic inspection to ensure the safety and habitable conditions of the property. But this is not deemed as the complete home inspection.
- In a way, the FHA approved appraiser performs double duty. They ascertain the existing market value of the property and also performing basic inspection to make sure that the property is habitable.
- It is a good practice to conduct an inspection before purchasing it.
So, as the HUD does not particularly need a full and independent property inspection for the FHA borrowers, they do need an HUD-approved appraiser to check the premises for various issues. If the appraiser catches any HUD violations, it will be documented by them and is reported back to the loan agent and the lender. These items must be duly repaired before you proceed ahead with the loan. The HUD-certified appraiser delivers a dual function in this case.
The HUD-Certified Appraisers Perform the Double Duty
The FHA doesn’t need any third party residential property inspection, but the HUD approved appraiser should always inspect the property for health and safety issues. The ascertained issues are to be reported back to the loan agent and addressed in order to close the escrow.
The borrowers using an FHA loan to buy a house are needed to sign a disclosure form known as ‘For Your Protection: Get a Home Inspection’. It showcases the importance of possessing the property inspected by professional means. It also delineates the distinction between the FHA appraisal and full home inspection. The inspection is undergone for three primary reasons
- To determine the value of a property
- To ensure that the property meets the FHA minimum property standards
- To ensure that the property is marketable.