Chapter
1 Appraisal & Requirements Page 1-01 Purpose of the Federal
Housing Administration (FHA) Appraisal and Property Condition Assessment
The appraisal
and property condition assessment is used to determine the market value and acceptability
of the property for FHA mortgage insurance purposes. The value serves as a basis
for determining the maximum FHA insurable mortgage loan. The appraisal is performed
for the use and benefit of HUD, and the lender involved in an FHA transaction.
In addition to providing an estimate of value, the appraisal provides an examination
of the property for any visible, obvious and/or apparent deficiencies that may
affect the livability of that property in terms of basic needs, health and safety
of the property's occupants. HUD/FHA MAKES NO WARRANTIES AS TO THE VALUE AND/OR
CONDITION OF ANY FHA-APPRAISED PROPERTY, therefore buyers/borrowers must determine
for themselves that the price of the property is "reasonable" and that it's condition
is "acceptable". NOTE:
Borrowers should be encouraged to obtain an independent detailed HOME INSPECTION
of the property. The actual cost of the home inspection fees, up to $300, may
be included as closing costs in meeting the borrower's minimum investment. (HUD
Handbook 4000.2 Chapter 5) |