Whether you’ve got a current FHA loan or a non-FHA loan, then you have the option of refinancing into an FHA-insured loan. But, to do so, you will find standards your home has to meet. One of them comes in the appraisal process. Typically, your residence will have to undergo an independent appraisal by an FHA-licensed appraiser prior to your refinance is approved.
If you do not currently have an FHA loan, you qualify for FHA’s standard refinancing program. You have two options. You can either refinance into a new loan which lets you tap into your home’s equity for money –also called cash-out refinancing–or you can just refinance the loan and get no cash out. In any event, an appraisal must determine whether your home is precious enough to encourage refinancing.
If you currently have an FHA loan, you can qualify for refinancing. You are getting exactly the exact same type of terms as a standard refi, but you are dealing with much less paperwork. In compact refinancing, you have an option when it comes to appraisal. If you’re going to roll your closing costs into your new loan, then you need an appraisal to determine your home’s worth. But if you intend to pay your closing costs from your pocket, then FHA will not need an appraisal.
There’s actually a situation when you may have to receive your home appraised twice. If you are trying to refinance a conventional loan to an FHA loan and you are intending to get money out with the new loan, then your loan-to-value ratio needs to meet a particular quantity. In cases like this, it should be no longer than 95 percent. If your loan-to-value ratio falls between 85 and 95 per cent, FHA can order another appraisal, the equal of another view, to see if your home is valued properly. This rule started in 2009 and does not apply to some other FHA refinancing option.
Your FHA lender will choose the appraiser. But that appraiser must be certified to appraise FHA real estate, and you can confirm your appraiser’s credentials via resources furnished by FHA. There’s a record of approved appraisers on the FHA site. All FHA appraisers have to be state certified, meet minimal national certification criteria and not be about some one of HUD’s or the General Services Administration’s watch lists.
Safety and the Appraiser
If you are refinancing your home, consider the property’s safety before you press forward. The main reason is that FHA’s appraisers are very concerned about safety and may not recommend your home for refinancing if some of the following hazards are present: erosion, landslides, mudflows, insufficient drainage, flood, hazardous actions, pollutants, radioactive materials and toxins. It makes very little sense to get an appraisal you’ll have to pay for if you know the home will not be advocated. If the appraiser discovers any safety issues with the home, he will probably require they be fixed before recommending the home for refinancing.