HUD has announced new rules requiring 2 appraisals on FHA loans that fall under the new stimulus package loan limits (those loans over $362K). While this may seem prohitibitive at first glance, and it will add to the time & expense of an FHA loan, it is a relatively easy hurdle to work with.
First of all, it is important to remember that FHA loans are more affordable alternatives to their Fannie & Freddie counterparts. FHA loans also still allow downpayments of just 3%, whereas Fannie & Freddie require 3% minimum now, and for loan amounts over $417K, 5% is required. In Declining markets such as Riverside, Ca, Sacramento, CA, Miami, FL, and San Diego, CA Fannie & Freddie increase the minimum another 5%. FHA does not require extra down payment in "declining markets". Even better, with Down Payment Assistance programs such as the Nehemiah program, homeowners can get into a new home for zero down payment.
Back to the second appraisal. Here is the good news part of the program. It will give the buyer some confidence that the appraisals are legitimate and accurate, and also give the opportunity to renegotiate price or exit a contract if the appraised value won't support the sales contract price. There is some latitude given to the second appraisal process in the HUD regulations. It can vary by up to 5% without effecting the original appraisal's use for the financing. It is a less invasive appraisal, as SFR 2nd appraisals won't require interior photos. Downside: the 2nd appraiser comes from the HUD list, which may result in slower turn times due to volume in high cost areas. (this is good news for FHA approved appraisers though!).
If you could benefit from an FHA loan, it is wise to work with a lender with strong FHA experience. VanDyk Mortgage has been a direct FHA lender for over 20 years. Call Brian Skaar at 866-900-2342 (toll free) or visit us online at www.vandykfunding.com to find out if FHA is right for you. FHA offers security, safety and affordability.
