Starting February 2010 there was a major change in how FHA appraisals are ordered during the FHA loan process. Prior to February 2010, the mortgage company handling your FHA home loan would order your appraisal though a local experienced appraisal they have known and worked with before. Now, FHA appraisals are randomly assigned through Appraisal Management Companies (AMC) used by FHA lenders. What this means is the mortgage company has very little contact with the appraiser and likely does not know who they are. Additionally, the appraisers are now getting lower fees and sometimes are not specialists in a particular area. So this can result usually in lower quality appraisals coming in lower amounts. This can actually be a good thing sometimes for those buyers who qualify FHA loan because they can possibly buy a property at a lower cost than its true value because of a substandard appraisal. But this may not be a great thing for those selling a home to a FHA home buyer or those wanting to refinance with an FHA loan, as these two types want the highest appraisal value they can get.
FHA appraisals are an upfront cost (as are all appraisals for any type of mortgage) for home buyers. One you receive FHA loan approval, find a property to purchase and get your purchase contract accepted, the FHA appraisal must be ordered and this is a $400-$450 fee paid up front by credit card.
FHA appraisals are also unique in that the appraisal “stays with the property” for 120 days. So once a FHA appraisal is done on a property, even if the current buyer who had the FHA appraisal done backs out and doesn’t buy the property, any buyer within the next 120 days will be influenced by that FHA appraisal. The next FHA buyer’s lender will see in the FHA system that an appraisal was done and it will have to be used. This is not the case for conventional loans.
So I hope these gives you a little more knowledge of the FHA appraisal process as you navigate your home purchase using FHA mortgage financing.
Some great aspects of FHA loans to remember:
- FHA loans in California can be had up to $729,750 with 3.5% down. This allows you to qualify FHA loan even in expensive coastal areas such as San Diego, Los Angeles, Orange County, San Francisco, San Jose and more.
- FHA loan credit scores do not have to be perfect. A 620 score is all you need to be considered.
- 3% of FHA loan closing costs can be paid by the seller
- FHA loan interest rates are still extremely loan compared to historical norms
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA, VA or conventional Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
Get FHA Loan to Buy New Primary Home in California And Keep Your Current House
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