Appraisals for Home Ready Loans
In the last section we spoke a bit more about asset documentation and credit documentation needed by the first time home buyer for Home Ready Loans. We also gave a few tips in regards to what the underwriter for lenders will need for these items. For this section, we will be talking about Appraisal Reports for the first home, and what additional documents may be needed because of an Appraisal Report review.
The first time home buyer can always expect to have to purchase an Appraisal Report. The Appraisal Report gives the underwriter a lot of information in regards to the home being purchased, including the layout, the year the home was last sold or purchased, and value information in comparison to homes in the immediate area. Unlike FHA and USDA loan programs, Home Ready loan program does not have as many guidelines and requirements, unless specifically stated in the purchase contract as being required. The home can be sold as is, with repairs being needed in Home Ready Appraisals, provided the buyer wishes to do so. Keep in mind that Home Ready Loans also has rules regarding recent flips like FHA loans and can’ be purchased less than 90 days after a recent sale, unless this property fulfills specific requirements.
What if There are Repairs Needed?
Additionally, unlike the USDA program, first time homes through the Home Ready Loan Program can have repairs that are needed, but the seller and buyer will only remedy these repairs if the purchase contract indicates so. Most of the time, these Appraisal Reports will be labeled “as is,” with any repairs being the responsibility of the first time home buyer. The appraisal report can cost anywhere between $300 and $600 depending on the Appraisal Management Company used, or AMC. The appraiser that is then tasked to go to a home strictly makes observations. In other words, this should not be confused with a home inspection. The first time home buyer needs to be sure that the home they are looking to purchase, along with any defects, is exactly what they wish to have.
The Appraisal Report for the first buyer can lead into additional expenses that may be rolled into the cost of the home, similar to the FHA Home Loan program. For example, for USDA and FHA, if the first time home buyer has a home that is on private well water, the underwriter will require a water inspection to insure that the water is safe to drink. This is may also still be the case for Home Ready Loan Programs.
Other Possible Inspections Resulting From Appraisal Reports
Other inspections that can result from a first time home buyer’s Appraisal Report can be roof inspections, septic inspections, mold inspections, and termite inspections. These inspections will need proof that the home does or does not need repairs and must also provide the copy of the invoice. If the first time home buyer purchases these inspections, these may be rolled into the cost of the loan if the purchase contract indicates that this will be the arrangement.
For the next section, we will be talking about loan application documents for the Home Ready loan program.