Here's what you need to understand about the inspection process to ensure your journey to homeownership is as smooth as possible:
Inspections for Kentucky USDA Loans aren't required, but highly recommended! While Kentucky USDA loans don't mandate home inspections for approval, getting one is in your best interest for a thorough understanding of your future home's condition. An appraisal is essential for loan processing, assessing the property's value and ensuring it meets Kentucky USDA standards. However, it's not a substitute for a detailed home inspection, which can uncover hidden issues. Water quality tests are a must for private wells. Ensuring your future home has safe drinking water is crucial. A water quality test is required for homes with private wells, adhering to state or EPA guidelines. With Kentucky USDA loans, navigating through the various requirements can be complex. It's essential to work with lenders experienced in USDA loans to guide you through the process.Whether you're a Kentucky first-time homebuyer or a seasoned Kentucky Realtor, understanding these key points can help prepare you for what lies ahead in the USDA loan process. Remember, being informed is your first step towards a successful home purchase!
As with all loan programs, the USDA Loan requires that an independent appraiser inspect the subject property in order to determine the property value. Specific to a USDA Loan, the appraisal report will be conducted by an FHA approved appraiser. The appraisal report must include verbiage or similar verbiage:
No different from a FHA or VA appraisal inspection, the appraiser is required to document all property deficiencies that preclude the appraiser from signing off on their report. A property deficiency is any defect to the house that the appraiser deems necessary to have repaired to ensure compliance to the loan program guidelines. Typical examples of property deficiencies include:
- Chipped and peeling paint
- Missing handrails on stairs and railing on decks
- Lights not working properly and wires hanging out of the electrical box
- Non-working heating and cooling systems and plumbing
- Houses that do not have utilities turned on
If a property has deficiencies, the appraiser will determine the value of the property, but state that their report is subject to the property defects listed being corrected. After the property defects are repaired, the appraiser will re-inspect the property, and signoff if the required repairs have been completed.
Bottom line, the USDA Loan program is designed to finance homes that are in move-in condition, not fixer-uppers. However, on a subsequent email I will review an option to establish a repair escrow account to address certain property deficiencies. The repair escrow account is only available through one of my many USDA lenders, so it is imperative to inform me when making an offer a house if this option will be required.
Kentucky USDA appraisals
Kentucky USDA appraisals can take home buyers by surprise. That’s why we’ve put together some good-to-know info about the process. Feel free to use this to help educate your clients.
The property must pass an FHA appraisal, so USDA and FHA have the same appraisal requirements, which determines the current market value and makes sure the house meets certain safety standards. Here is a list of items an FHA appraiser may look for:
General Health and Safety
- Foundation or structural defects
- Whether the utilities (water, sewage, heat, and electricity) all work
- Chipped or peeling paint in homes built before 1978
- Incomplete renovations
- Water damage
- If the property is accessible to vehicles, especially emergency vehicles
- Exposed wiring and uncovered junction boxes
- Whether the house is too close to outside hazards, such as a leaking oil tank or a waste dump
- Excessive noise, such as being close to an airport
- Missing handrails
Exterior
- Leaky or defective roof and holes in the siding
- Leaning or broken fencing
- Doors that don’t properly open or close
- Condition of gutters, chimney, stairs, railings, and porches
- If swimming pools are up to code
Every Room
- Whether each room has electricity
- Whether each room has a window or door to the exterior to be used as a fire escape
Kitchen
- Missing or broken appliances usually sold with a home, including stove and refrigerator
- Broken or leaking sink
Bathrooms
- Broken or leaking toilet, sink, or tub/shower
- No ventilation (either an exhaust fan or window)
Crawl space or basement
- Basement moisture
- Evidence of past or present standing water
Heating and Plumbing
- Inoperable HVAC
- Major plumbing issues and leaks
These are some common items an FHA appraiser looks for, but other issues that might make a house unsafe could keep it from passing. An FHA appraisal is not the same as an independent home inspection. It’s still a good idea to get a separate home inspection to make sure you’re making a wise investment!
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Posted by Joel Lobb, Mortgage Broker FHA, VA, KHC, USDA
Appraisal, appraisal issues, appraisal standards for USDA RHS, property eligibility, USDA APPRAISAL REQUIREMENTS
Joel Lobb Mortgage Loan Officer
American Mortgage Solutions, Inc.10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364
Text/call: 502-905-3708
fax: 502-327-9119
email: kentuckyloan@gmail.com
http://www.mylouisvillekentuckymortgage.com/
NMLS ID# 57916, (www.nmlsconsumeraccess.org).
