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Anyone Have FHA Loan Experience?

Home ▸ Archive ▸ Serious Business ▸ Anyone Have FHA Loan Experience?
ernest_t_bass's avatar

ernest_t_bass

12th Son of the Lama

24,984 posts
Jan 28, 2011 1:18 PM
If so, I have a question. We are currently in the process of closing on a home through an FHA loan. I know that one of the things that throws red flags on an FHA appraisal is chipping paint. There is a spot on the home we are purchasing that has chipping paint that we are going to need to fix.

Question: What other things can throw up red flags in the process? There is a window in one of the rooms that has a crack in it. Is this something that will throw up a red flag? The part about it that I don't like... If the FHA appraiser goes through and finds something that we need to fix, WE (the buyer) get assessed a $75 fee, then have to pay to fix it, then have to pay for another damn appraisal.

I personally feel that the seller should be responsible for some of this, but I am under the understanding that it doesn't work out like that, based on the structure of the loan.

Anyway... the window. What say you?
Jan 28, 2011 1:18pm
coyotes22's avatar

coyotes22

Go Tigers

11,298 posts
Jan 28, 2011 1:21 PM
I went with an FHA two years ago, on our home. The loan lady i went through, said that all the FHA rules, have been nixed. Thats what she told me. She said that there are still lenders that use these "rules", but i do not believe they are to effect the sale of a home any more. Better check into it more, and get other opinions before you do anything.
Jan 28, 2011 1:21pm
coyotes22's avatar

coyotes22

Go Tigers

11,298 posts
Jan 28, 2011 1:23 PM
I can PM you her name and number if you would like me too. I may be wrong though. But we did not even pay for an inspection of the home. Me and a buddy did it our self.
Jan 28, 2011 1:23pm
W

WebFire

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14,779 posts
Jan 28, 2011 1:36 PM
I am doing and FHA right now on our current home. I was told about chipping paint and such. We are spending some time on fixing some things up this weekend. My banker told me that they aren't as strict as they used to be in certain areas, but still are in others.

We have some chipping paint (very minimal) and a couple other minor things, but I think we'll be ok. He said it also varies with each appraiser.

I have the actual FHA appraisal sheet that the appraiser has to use. I'll send it to you if you'd like.
Jan 28, 2011 1:36pm
W

WebFire

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14,779 posts
Jan 28, 2011 1:37 PM
coyotes22;656647 wrote:I can PM you her name and number if you would like me too. I may be wrong though. But we did not even pay for an inspection of the home. Me and a buddy did it our self.

You can't get an FHA loan without having it appraised by an FHA-certified appraiser.
Jan 28, 2011 1:37pm
W

WebFire

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14,779 posts
Jan 28, 2011 1:39 PM
Maybe this will help?
VC-12 LEAD BASED PAINT HAZARD
For any home built prior to 1978, check for evidence of defective paint surfaces, including: peeling, scaling or chipping paint.
Provide a description of yes responses on Page 4:
a. Evidence on interior
( ) yes ( ) no
b. Evidence on exterior
( ) yes ( ) no
Year built ___________

If the home was built before 1978, this may indicate a lead paint hazard. For all FHA insured properties, the seller is required to correct all defective paint in or on dwelling units built before January 1, 1978 in accordance with 24 CFR Part 35.
VC-11 OTHER HEALTH AND SAFETY DEFICIENCIES
Check the appropriate response for evidence of health and safety deficiencies.
Provide a description of yes responses on Page 4:
a. Multiple Broken windows
( ) yes ( ) no
b. Broken or missing exterior stairs
( ) yes ( ) no
c. Broken or missing exterior doors
( ) yes ( ) no
Jan 28, 2011 1:39pm
ernest_t_bass's avatar

ernest_t_bass

12th Son of the Lama

24,984 posts
Jan 28, 2011 1:45 PM
So, since there is only ONE window (maybe two, will know tomorrow) do you think they will let it slide?
Jan 28, 2011 1:45pm
W

WebFire

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14,779 posts
Jan 28, 2011 2:30 PM
ernest_t_bass;656689 wrote:So, since there is only ONE window (maybe two, will know tomorrow) do you think they will let it slide?

I really think it depends on your appraiser.
Jan 28, 2011 2:30pm
hangonsloopy's avatar

hangonsloopy

Senior Member

1,291 posts
Jan 28, 2011 2:47 PM
When we bought our house in 08', we had to re-paint the entire house. Which wouldn't be that bad if we weren't buying a tri-plex 3 story home. Needless to say it sucked. We had so many family and friends help though we got it done in 2 weekends.
Jan 28, 2011 2:47pm
W

WebFire

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14,779 posts
Jan 28, 2011 4:08 PM
What kind of shape was the paint in? We have stucco and we repainted it when we bought the house 10 years ago. So it's in good shape. But it does have some spots, like porch ceilings and wood trim, that needs painted after 10 years.
Jan 28, 2011 4:08pm
T

thavoice

Senior Member

14,376 posts
Jan 28, 2011 4:11 PM
Just went through this. As for the window...I think taht is probably going to be OK, as it is an easy fix and i dont think will be looked upon as a hazard.

We had the cost of it built into the agreement for the sellers to pay I do believe. We did have an issue in the basement with a crack. We had a concrete guy come in to look and had to write a letter that stated they believed it was structurally OK.
It was a little bit of a hassle but worked out well in the end I think
Jan 28, 2011 4:11pm
T

thavoice

Senior Member

14,376 posts
Jan 28, 2011 4:14 PM
We were required to have an inspector come in first and he knew what the FHA people looked for . He gave us a heads up on some outlets that needed grounded and such.

We pretty much knew the sellers wanted to get rid of it...been on market for over a year and their next house was waiting empty. So we worked in the cost of the appraisals and such and had them pay for the outlets to be brought up to code.
Jan 28, 2011 4:14pm
S

Steel Valley Football

Senior Member

4,548 posts
Jan 31, 2011 9:36 AM
FHA will be the next "bank" bailout and it will be bigger than the current trillion dollar+ mess. Mark this down.
Jan 31, 2011 9:36am
thedynasty1998's avatar

thedynasty1998

Senior Member

6,844 posts
Jan 31, 2011 9:47 AM
The only experience I really have with FHA is through my own personal home purchase. After our closing, the selling agent said, "I've never had an FHA loan move so smoothly". Not really sure what kind of problems she has experienced. One thing that I think worked for me, is that I was using a bank that my boss is on the board of. So they helped us out in every way possible, which made my job as the buyer and the agent (I represented myself) very easy.

There were a few things that our bank was surprised about that the appraiser didn't make a big deal about though. One that comes to mind is the stairs off of our deck didn't have a hand rail.

But other than that, my experience was very easy. I've heard the horror stories of FHA not financing a home, or their appraisals coming in low. I know that it's nearly impossible to buy a "fixer-upper" with only 3.5% down.

Sorry I can't be of much help.
Jan 31, 2011 9:47am
W

WebFire

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14,779 posts
Jan 31, 2011 10:09 AM
I'm nervous about our appraisal. I think we are just going to see what they say and fix what needs fixed. We could drive ourselves crazy trying to figure out what an appraiser might say on a 90 year old house.
Jan 31, 2011 10:09am
ernest_t_bass's avatar

ernest_t_bass

12th Son of the Lama

24,984 posts
Jan 31, 2011 10:20 AM
Went through the house this weekend. Possible issues:

- Chipping paint on the exterior
- Open stairway to the basement. May need spindles or a hand rail, or need to be closed off.
- Couple loose boards on hardwood floor.
- One chipping spot on the plaster/paint heading into basement
- Cracked windows? Not sure. There are only two, out of about 30 windows in the house. The wording on the checklist said "multiple" broken windows. These windows are in very LOW traffic area.
Jan 31, 2011 10:20am
W

WebFire

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Jan 31, 2011 10:41 AM
ernest_t_bass;658887 wrote:Went through the house this weekend. Possible issues:
- One chipping spot on the plaster/paint heading into basement.

If they dick me for every paint chip and plaster missing, I'll be screwed.
Jan 31, 2011 10:41am
S

Steel Valley Football

Senior Member

4,548 posts
Jan 31, 2011 12:57 PM
thedynasty1998;658857 wrote:The only experience I really have with FHA is through my own personal home purchase. After our closing, the selling agent said, "I've never had an FHA loan move so smoothly". Not really sure what kind of problems she has experienced. One thing that I think worked for me, is that I was using a bank that my boss is on the board of. So they helped us out in every way possible, which made my job as the buyer and the agent (I represented myself) very easy.

There were a few things that our bank was surprised about that the appraiser didn't make a big deal about though. One that comes to mind is the stairs off of our deck didn't have a hand rail.

But other than that, my experience was very easy. I've heard the horror stories of FHA not financing a home, or their appraisals coming in low. I know that it's nearly impossible to buy a "fixer-upper" with only 3.5% down.

Sorry I can't be of much help.

It wasn't that you had an "in". HUD is dropping FHA requirements left and right. If the rule is still in tact, then it must be followed and there is no local bank that can skirt the rule. What happened is that the rules is much more lax now.

HUD used to require a certain amount of experience to be an FHA appraiser and was very strict with our work. You had to take a test to be on the FHA roster. If our appraisal got graded and fell below a certain level we had to go before the local office and possibly get removed from the roster. Now, there is no test. You simply request to be on the FHA roster. I was on it for several years.

So, now there are no barriers stopping any appraiser from doing FHA and along with that they are dropping many of the old requirements like fixing things. For example, you used to have to replace old carpet before the loan would qualify. Now, the house doesn't even need to have carpet at all to pass.

Experts in the financial world are now calling FHA the new sub-prime loan. They are also predicting it's collapse in the next ten years or sooner and say it will be the next entity that will need bailed out (and at a much higher cost than the current mess).
Jan 31, 2011 12:57pm
W

WebFire

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Jan 31, 2011 1:51 PM
So Steel, just how strict are the appraisals then? Our house is 90 years old. It's not perfect. But it's a solid house and definitely safe and sound.
Jan 31, 2011 1:51pm
ernest_t_bass's avatar

ernest_t_bass

12th Son of the Lama

24,984 posts
Jan 31, 2011 2:05 PM
I know this... if our house does not pass inspection, and we have to do a lot to it to meet inspection, we will more than likely either say "to hell with it," or move in as renters and make the modifications as we go.
Jan 31, 2011 2:05pm
S

Steel Valley Football

Senior Member

4,548 posts
Jan 31, 2011 8:49 PM
WebFire;659173 wrote:So Steel, just how strict are the appraisals then? Our house is 90 years old. It's not perfect. But it's a solid house and definitely safe and sound.

It's a case by case thing. I'd have to see the house. I got off the roster last year so I'm not up to date exactly on the specific rules, but you can find them all on the HUD website.
Jan 31, 2011 8:49pm
S

Steel Valley Football

Senior Member

4,548 posts
Jan 31, 2011 8:50 PM
ernest_t_bass;659196 wrote:I know this... if our house does not pass inspection, and we have to do a lot to it to meet inspection, we will more than likely either say "to hell with it," or move in as renters and make the modifications as we go.
I emailed your list above to a friend who works at HUD. I'll let you know what he says.
Jan 31, 2011 8:50pm
ernest_t_bass's avatar

ernest_t_bass

12th Son of the Lama

24,984 posts
Jan 31, 2011 9:07 PM
Steel Valley Football;659777 wrote:I emailed your list above to a friend who works at HUD. I'll let you know what he says.

Much obliged, good sir.
Jan 31, 2011 9:07pm
S

Steel Valley Football

Senior Member

4,548 posts
Jan 31, 2011 10:15 PM
His reply was about what I expected, though this is strictly by rule. If your appraiser is lazy, it may be different. That happens a lot.

- Chipping paint on the exterior needs corrected (including foundation block if painted).

- Open stairway to the basement needs stairs and a handrail or closed off.

- Loose boards on hardwood floor need secured only if they are a trip hazard.

- Remove damaged plaster and paint (only the area where the paint is chipped will do)

- Cracked windows should not be an issue if there are only two.
Jan 31, 2011 10:15pm
W

WebFire

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14,779 posts
Jan 31, 2011 10:45 PM
What are the requirements for egress from a bedroom?
Jan 31, 2011 10:45pm