USDA inspection/appraisal in NH? (loan, pre-approved, credit, fee)

[rubyruby04]

We are looking at the possibility of purchasing with a USDA loan in New Hampshire. Does anyone have insight into how strict the appraisal/inspection process is? We've found several homes that are in our price range, but many require some sort of repair. If the home doesn't meet FHA requirements, how much room do we have to negotiate with the seller and/or lender to make repairs? For example, if the house has some flaking paint on the exterior, but not on the interior, will the loan be turned down? Or, if there is damage to the roof? Would the best scenario be for us to make an offer contingent on the seller bringing the house up to FHA standards? We want to get the first time tax credit too, so I'm not sure how repairs or failure in the inspection process would delay closing.

Thank you

[DanBev]

We sold our North Florida home to USDA buyer,FSBO,they were pre-approved for so much money and a time limit by local bank in which closing had to take place.
A FHA approved appraiser did appraisal and inspection,had certain items which had to be right.Example,romex wire on porch which I placed years ago had to be placed in plastic conduit and which were in place,GFCI outlets and inspection of attic,all and all a cursory inspection.we closed with title company.Checked to see if any unpermitted work was done on property.

[nmb30]

Originally Posted by rubyruby04

We are looking at the possibility of purchasing with a USDA loan in New Hampshire. Does anyone have insight into how strict the appraisal/inspection process is? We've found several homes that are in our price range, but many require some sort of repair. If the home doesn't meet FHA requirements, how much room do we have to negotiate with the seller and/or lender to make repairs? For example, if the house has some flaking paint on the exterior, but not on the interior, will the loan be turned down? Or, if there is damage to the roof? Would the best scenario be for us to make an offer contingent on the seller bringing the house up to FHA standards? We want to get the first time tax credit too, so I'm not sure how repairs or failure in the inspection process would delay closing.

Thank you

Hi Ruby,

USDA appraisals have to be done by an FHA approved appraiser and it does follow FHA requirements. The typical issues are going to be safety/habitability related. Here is link to the HUD site that covers appraisals.
HUD FHA HOC Reference Guide Hazards and Nuisances

There are several "steps" in the contract that will protect you and give an "out".
The contract will have an inspection section that gives you a dead line to have the inspection done, make a request to the seller to address any issues found by the inspection and dead line for the seller to respond. Please note that this is totally different from the appraisal.
Let's say the inspection finds an issue with the hot water heater - you would ( with help of your Realtor ) approach the seller with the inspection and ask for some type of remedy, whether it's to replace the hot water heater or reduce the purchase price. The seller will have a set amount time to respond and if you can't come to an agreement, you cancel the contract and your earnest money deposit is returned.

You will also have an appraisal contingency in the contract that should cover the same thing.
When the appraisal is done the appraiser is required to make note of anything that would be an issue for FHA/USDA. At this point, if an issue is found you go through the same process as the inspection. The other important aspect of the appraisal contingency is that it covers you if the home appraises for less then the agreed upon purchase price.

I hope this helps you out.

[Great Lakes Broker]

Here in Michigan, if the loan is "direct Funded" by USDA they tend to be very tough on condition. I've seen where they required the seller correct everything noted on the appraisal AND THE HOME INSPECTION REPORT, even though they weren't directly security, safety, structural issues.

If you're using a lender who is getting you an USDA secured mortgage, they tend to be more like the standard FHA. Depending on location, they may require well & septic and pest report too.

[lindastutts]

Is there a standard fee for a USDA appraisal fee? My daughter was quoted $340 for the appraisal fee. Does this sound right.
Linda

[CulDeSac]

Originally Posted by lindastutts

Is there a standard fee for a USDA appraisal fee? My daughter was quoted $340 for the appraisal fee. Does this sound right.
Linda

That sounds about right because here in TX I paid $425 for a USDA appraisal fee...