Are you thinking about refinancing your home? Trying to understand everything involved in getting a mortgage can make your head spin. You probably know that getting your house appraised is one of the major steps in the process, but how does that work exactly? Is there anything you can or should do to prepare for the appraisal to try to raising the value of your home?
Yep, there are some things you can do to raise your home’s value. First, let’s look at some of the basic appraisal requirements for an FHA mortgage.
An FHA mortgage is backed by the Federal Housing Administration. This means the government insures the loan so there is less risk for the mortgage lender in case the borrower defaults on their loan. These mortgages were created in response to all of the foreclosures in the 1930s and are very popular, especially for first-time home buyers. FHA loans are often easier to qualify for because they don’t require a high credit score (you can get them with a FICO as low as 580) or a high down payment (usually just 3.5%.)
On the flip side, FHA loans require mortgage insurance for the life of the loan with a down payment of less than 10% (because of the more relaxed standards), and the home has to meet certain requirements. If you’re applying for an FHA refinance loan, you’ll have to get your home appraised by a special FHA-approved appraiser who looks at all the factors a regular appraiser does, but also takes a more in-depth look at health/safety aspects and risks of the home.
What Is an FHA Appraisal?
An FHA appraisal has the same basic attributes as any appraisal. A value is placed on your house by evaluating it against comparable properties in the area. However, FHA guidelines require that the appraiser also makes sure the house meets certain safety standards.
What are these safety standards? Let’s run through a quick list. It’s important to note that while some of these rules only apply to FHA loans, it’s a good idea to fix these things up no matter which type of appraisal you need.
Minimum Property Standards Checklist
For an FHA loan, in addition to placing a value on the property, the appraiser is looking for several potential hazards that could cause safety issues. These include:
- Exposed studs or floorboards
- Water damage
- Holes in the roof or siding
- Incomplete renovations
- Missing handrails
- Driveway or sidewalk damage
- Chipped or peeling paint in houses built before January 1, 1979
These are a few common issues, but if anything else could make the house unsafe, you run the risk of failing the appraisal inspection.
If your house has any of these issues when you’re trying to refinance, you’ll need to take care of them before your loan can close.
Let’s go over each of those a little bit to discuss some alternatives for getting the work done.
Exposed Studs or Floorboards
You can’t have wall studs or floorboards showing. That would mean things are unfinished in addition to being a safety hazard.
While drywalling and laying flying is potentially doable for many people, it can be a bit of a pain in the neck. This is another instance when hiring a contractor could be easier.
In terms of water damage, the types of things the average person can do to fix it might be limited to mitigation in the immediate aftermath of the damage itself. You want to pump the water out and patch up anything that needs it.
If you have lasting, visible damage, you could need to replace drywall or floorboards. Fixing these will again depend on your level of comfort and any repairs will need to be up to local code.
Roof or Siding Holes
If you have holes in the roof or siding, those need to be dealt with because you don’t want the house unprotected and exposed to the elements. However, unless you’re extremely confident in your abilities, this isn’t the kind of thing where you want to jump up on a ladder and fix it.
You aren’t Spider-Man, so it might just be easier to hire a contractor who has the equipment and know how to get the job done.
Any work that you’re having done on your house or that you’re in an doing yourself at the time of the refinance has to be completed before the loan can close.
The appraiser has to view completed construction in order to give an accurate value.
Depending on your skill with woodworking and anchoring realms into walls and decks, you may be able to do this repair yourself, but you need to make sure that things are up to code and meet minimum safety standards.
Driveway or Sidewalk Damage
If you have driveway or sidewalk damage on your property, you might be able to put down some cement. However, you’ll have to make sure the driveway is leveled off where you make the replacement.
If you’re doing a complicated fill and parts of the driveway are sunk in, you might be better off having a contractor do the job.
The paint issue is deserving of some special attention, so let’s touch on that next.
Dealing with Lead Paint
For homes built before January 1, 1979, you have to protect against poisoning from lead-based paint. Even for homes built after 1979, the exterior paint has to be touched up if the finish is unprotected. If there are any areas, inside or out, where you have cracked, peeling, scaling or loose paint, you must carefully wash, sand and scrape away the loose paint while making sure to catch all the paint chips with a drop cloth or something similar.
If your home doesn’t meet the requirements, you’re going to have to make the necessary repairs/upgrades before you can qualify for an FHA mortgage. So, if you want to refinance soon to take advantage of current rates, you can start working to get your home up to FHA standards now to help move the process along quickly and smoothly.
If you’ve got any damaged paint on your home, you’ll want to take care of that right away. You shouldn’t really use regular paint products when the temperature drops below 50 degrees.
There are some paints designed for cold weather that can be applied at lower temperatures. Even with paint designed for temperatures as low as 35 degrees, remember that the air and the surface you’re painting can’t fall below 35 degrees, even at night. So, if you’re going to be painting in cold weather, you still need to keep an eye on the weather and plan ahead. Also, whatever other products you’re using, primer, stain, caulk etc. need to be designed for use in cold weather as well.
With FHA appraisals, you can be under the gun to get mandatory improvements done in a short period of time, but if you paint when it’s too cold or wet and the paint doesn’t last, then you’ve wasted your time and money.
When the weather gets warmer, get a head start on your home improvements. If you’re painting inside your home, you’ll be fine with any indoor paint you find in the stores, but if you’re painting outside, there are some things you should know.
When it’s below 50 degrees outisde, paint will take a lot longer to dry, and this increases the risk of dust, dirt, bugs and other debris getting stuck in the paint or having it smear.
You can use either water or oil-based paint on exterior surfaces, but certain paints are better for particular materials. Oil-based primers and be used with either type of paint, but water-based primers should only be used with water-based paint.
You can use either oil or latex for floors and porches, but 100% acrylic latex usually works best because it’s weather-resistant.
Both oil and latex paints are available for gutters, but oil is better this time, especially for tin gutters. Oil-based paint also adheres well to galvanized steel and aluminum, but be sure to use a galvanized metal primer.
You can get both oil and latex paints for house/siding paint jobs – they’ll endure severe weather conditions.
Masonry paint is usually latex and works on stucco, concrete, cement and shingles. Often, you have to use some kind of bonding primer first.
For painting a pool or marine area, you’ll want a polymerized cement-based paint for concrete and granite surfaces. Make sure to look for paints that are stain and abrasion-resistant and double check the compatibility with your surface.
If you’re looking to paint the roof, you’ll need an acrylic-latex blend and it should be mildew/algae proof, but paint is never a substitute for waterproofing your roof.
How Long Does an FHA Appraisal Last For?
Once you get your FHA appraisal, you have to close your loan within 120 days. The original appraiser will come out and verify that the repairs have been done and that your property can be valued as it was originally.
The FHA requires that this must be done by the original appraiser. If the appraiser is not available or the process has taken more than 120 days, a new appraisal must be ordered.
Hopefully, you’ve found this info helpful, but if you have any questions or other information, please share them with us! Follow these tips and get started on your refinance today!
For more on the appraisal process, go ahead and check out this article on how to prepare for an appraisal.
If so, subscribe now for tips on home, money, and life delivered straight to your inbox.