Like conventional mortgages which require appraisals, New Jersey FHA Loans are no different. In some ways, the FHA requirements while different will ensure that the borrower is buying a home that is within proper values for the area. It also means that the house is sound of “wind and limb”. That means that everything structurally is sound and the home is safe. The employees at 7th Level Mortgage will be happy to go over everything regarding the loan and the appraisal requirements for your loan to close smoothly without any hitches or issues.
The following are what the FHA is looking for on every appraisal in the state of New Jersey:
Market Value: The market value of the home is determined to confirm the amount the FHA is willing to guarantee. One of the most common issues with value is that many people, especially in a refinance scenario, over-estimate the value. I recommend before applying for a loan that you check out with a site like Zillow to get an approximation for similar homes in your area. If you don’t have access to the internet, ask your loan officer at 7th Level Mortgage to help you with an approximation of the value of your home.
Valuation Conditions: This part of the appraisal is critical because if there are any repair issues, the appraiser will annotate these issues in his report to the mortgage company. For the loan to close, any issues that require repair must be completed before closing.
Hazards, Odors, Physical Defects, and Noise: Of critical importance to every FHA lender is whether or not the home has hazards, odors, physical defects, or unusual noises. The hazard that came to the fore in the 1970s was the issue of lead paint. No lender will close on the home if there is lead paint in or on the home. Lead is dangerous to children. Since 1978, where lead paint is present, it must be removed and replaced with material acceptable to the lender and the FHA. Unusual odors could indicate an issue with well and septic systems that are defective or gases that are escaping into the air via leaking broken pipes. Physical defects could be stairs that are beginning to break down, flooring in disrepair, and other structures in the house that could injure somebody. Older components could indicate a breakdown by making noises. The FHA, the appraiser, and the lender will want to know where this noise is coming from and, if necessary, repair the component that is making the noise.
Longevity: The FHA wants to know how long the property is expected to be sound and habitable to justify a long-term loan being approved for the property. It would be foolish for any lender to approve a loan if the property’s life expectancy is shorter than the loan term.
The Site: The FHA appraiser will look at the topography of the property as well as the soil, easements, and any encroachments. One of the major issues is in the 1970s when Hooker Chemical company used the site as a chemical dump site, people became afflicted with many illnesses including cancer. President Carter signed off on legislation regarding sites like this to protect the citizens. Properties with easements and encroachments typically will not be approved by the FHA because the right to cross over into someone else’s property typically will be denied. It denies the other owner use of their property.
A very common misconception is that the FHA and the lender require two appraisals. This is not so. The lender may require a second appraisal to ensure that the property meets FHA guidelines for mortgage insurance. Keep in mind that the appraisal does have an inspection component so I urge you to obtain a property inspection if you want one performed. Lenders, including 7th Level Mortgage, will not require an outside property inspection to be performed because their interest is only in what is contained in the FHA appraiser’s inspection report.
An FHA appraisal is valid for 120 days. Other criteria that are required for an FHA approval in terms of the appraisal are:
- There must be enough space between the house being appraised and a neighboring property so the exterior walls can be maintained
- If you are purchasing or refinancing a duplex or other multi-family dwelling each unit must be able to be maintained independently from the other unit or units.
- Each unit must have its’ own utilities with separate meters for billing as well as the appropriate shut-offs.
- The residents must have access to the property without being forced to trespass onto anothers’ property.
7th Level Mortgage and their employees are trained in FHA financing, what the rules are as well as providing you with assistance each step of the way in getting your loan closed, the keys transferred to you, and making sure that when you move in everything is in order for your new home.
7th Level Mortgage is a leading one-stop mortgage company providing deeply informed, custom-tailored assistance with each mortgage transaction phase. If you are searching for a home loan in New Jersey, Pennsylvania, Delaware, Maryland, New York, or Florida, please contact us today so that we can determine the best Mortgage Lender to place your loan with and get you the best possible rate and program.