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FHA appraisals are conducted by certified real estate appraisers in order to determine whether a home or building meets the livability criteria necessary to qualify for financing under a Federal Housing Authority (FHA) mortgage program. While mortgage lenders almost always require an appraisal as part of the home buying process, FHA appraisals can be more rigorous, as they are geared toward protecting the well-being of the home buyer and his family rather than a financial investment. Appraisers who perform FHA appraisals must meet certain criteria and be included on a roster of appraisers eligible to perform an FHA appraisal, and the appraisal must address the standards set by the FHA.
In the United States, the FHA guarantees certain mortgage loans for individuals and families who qualify for this assistance. Typically, FHA loans require only a small down payment, and the credit standards for receiving an FHA loan are not as rigorous as those for some conventional loan products. As the FHA guarantees the mortgage, the FHA has an interest in ensuring that the homeowner will be able to live comfortably and safely in the home and that the home will not lose value because it is in disrepair. As such, FHA appraisals are carried out by qualified appraisers to safeguard the interests of the homeowner as well as the FHA.
Not all real estate appraisers are qualified to perform FHA appraisals. Instead, FHA appraisals must be completed by the appraisers who are listed on the FHA appraiser roster, which is available from the United States Department of Housing and Urban Development (HUD). In the United States, there are various levels of real estate appraiser practice. New applicants for the FHA appraiser roster must be credentialed at the certified level of practice and must not be in default on any loans guaranteed by the federal government. The home buyer or lender must hire an appraiser from this roster if the home buyer wishes to obtain an FHA loan.
The FHA provides detailed guidelines for an FHA appraisal. While many of these guidelines are consistent with standard appraisal practices, other considerations come into play during FHA appraisals. For example, an appraiser performing an FHA appraisal will be concerned about things like whether it is possible for family members to easily escape from their bedrooms if a fire breaks out in the middle of the night. The appraiser will also want to make sure that the home is ready to move into and has appropriate appliances already in place so that an individual or family has access to what is needed to cook and generally live in the home without having to use outside facilities.
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