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FHA changes make appraisals more appealing

Rigorous appraisals are no longer a time-consuming and pain-staking process for homebuyers and mortgage lenders seeking to use home loans backed by the Federal Housing Administration (FHA).

As part of its continuing efforts to compete with conventional lenders, the FHA has scaled back its appraisal requirements. Beginning in January, 2007, appraisers no longer have to flag a home because of minor repairs such as leaky faucets and cracked window panes. The agency will concentrate only on big items such as leaky roofs, standing water and structural defects.

The change is designed to help FHA win customers who have been turning to sub-prime lenders who can underwrite a loan more quickly and easily.

While the FHA appraisal process is simpler, homebuyers need to keep in mind that an appraisal is not the equivalent of a home inspection. Homebuyers should insist on a home inspection conducted by a qualified inspector. And avoid buying a house that could cost far more in repairs down the road.

For more information about appraisals required by FHA, please visit http://www.hud.gov/groups/appraisers.cfm