Managing Your Home Inspection for FHA Financing

Federal Housing Administration (FHA) insured loans are issued by federally qualified private lenders. FHA financing is an attractive alternative to conventional or sub-prime mortgage loans for low- and moderate-income families, first-time home buyers, and those with imperfect credit. However, FHA financing process can be confusing to many consumers. You will need to provide your loan officer with information that will help them assess your eligibility and the terms of the loan. This includes paperwork showing verification of employment, a credit report, preliminary title reports, and other identification and financial documents.

In addition, a property appraisal will be performed by an FHA approved appraiser to determine the market value of the home and to verify that it meets FHA property standards. An independent home inspection is an important part of the process as well, and this is distinct from the appraisal process. Appraisals help lenders determine the mortgage loan amount, while home inspections alert buyers to home defects. By identifying problems with the condition of your home before closing, you can negotiate to have these problems fixed and can make an informed home purchase decision. After closing, the cost to repair these problems will fall to you.

During the FHA financing process it's important to keep some key things in mind to get the most of your home inspection. Securing FHA financing is obviously a major goal on your way to homeownership, but a good home inspection can help make sure you don't end up buying a money pit.

Home Inspection Tips for the FHA Financing Process

• Remember, an FHA appraisal is NOT a home inspection. Although your FHA appraiser may comment on some problems found in the home, this does not replace the need for you to hire your own professional home inspection.
• Even if your FHA Financing advisor doesn't require or suggest it, get a home inspection on your own. It's the responsible thing to do because you want to know the condition of your home before you buy it.
• Once you arrange for the home inspection, make plans to attend it as well. The home inspection is your chance to get a professional tour of your potential home. A good home inspector will give you maintenance tips, show you where important valves and switches are located, and help you learn how to operate some key elements. This is also your time to ask questions
• Work hard to get the house you love, but don't take short-sighted shortcuts to get it by skipping the home inspection. Getting FHA Financing for a house that has significant defects you did not expect can turn homeownership into a headache instead of a dream.