What Buyers and Sellers need to know about FHA FINANCING

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Over the next several weeks I’ll be doing a series of posts addressing what sellers need to know about both VA and FHA financing in order to make their homes more sell-able.

The first of this series will be FHA Financing which is a fairly popular loan in our area.

FHA financingAccording to the FHA Single Family Housing Policy Handbook, “HUD requires every property to be Safe, Sound, and Secure to be eligible for FHA Insurance.” There are MPR (Minimum Property Requirements) and MPS’s (Minimum Property Standards) that each property must contain in order to comply with HUD.  These basic requirements and standards are the basis for identifying the deficiencies of the property.  FHA appraisers are required to note these deficiencies within their appraisal form and must be addressed by the mortgagee prior to closing.

Examples of some property deficiencies and adverse conditions may include: Evidence of dampness, defective construction,  evidence of settlement, leakage, pests or wood destroying insects, decay/wood rot, peeling paint, environmental hazards, exposed or defective electrical wiring, double strapped water heaters, defective overhead garage door openers, carbon monoxide and smoke detectors or anything that affects the health & safety of the occupants, collateral or structural integrity of the dwelling.

In order to make the property comply with HUD’s MPR the appraiser must require repairs of all noted deficiencies, including an estimated Cost to Cure that has been properly developed and applied within said report.  Cost to Cure is based on the cost of local licensed contractors to complete repairs not the home owner’s cost of completing repairs themselves.

Many cosmetic repairs may be reported by the appraiser and considered when rating the overall condition and valuating the property. Minor or Cosmetic repairs may include minor plumbing leaks such as a dripping faucet as long as it doesn’t show damage, holes in window screens, cracked window glass,  missing handrails that don’t pose a threat to safety, or  defective interior paint surfaces in housing constructed after 1978.

As a guideline to assist my clients in expediting the appraisal process, I recommend the following repairs are completed prior to scheduling an FHA appraisal Inspection:

  • Repair (sand, scrape, fill, prime & paint) all defective paint surfaces
  • Repair all leaks (roof, foundation, HVAC system, & plumbing)
  • Repair all structural/foundation settlement
  • Repair all defective roofing
  • Repair/Secure/Install defective/missing handrails
  • Repair all defective/exposed electrical wiring
  • Install safety items such as Smoke & Carbon Monoxide detectors ,GFCI outlets, H20 safety straps & relief valves.
  • Repair/Replace broken or inoperable windows & doors as well as their locks
  • Repair/Replace inoperable overhead garage door openers (make sure the safety stop functions)
  • Repair/Replace broken stairs or uneven walkways, floors, or driveways.
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Janet 
SimonsI am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.

Janet Simons | Certified Residential Specialist | Real Estate Broker
Mountain Valley Real Estate