Financing in Indianapolis>Question Details

The Indy Team…, Real Estate Pro in Indianapolis, IN

On a HUD property, can the lender use the FHA appraisal if the buyer is getting a conventional loan?

Asked by The Indy Team (317) 888- INDY, Indianapolis, IN Wed Jun 22, 2011

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Generally, an FHA appraisal CAN be used on a conventional loan but a conventional appraisal CANNOT be used on an FHA loan. An FHA appraisal can be used as long as it can be proven that it complies with HVCC. (Home Valuation Code of Conduct) Most appraisals now done by Appraisal Management Companies (AMCs) include this compliance certification.

Please note however that "can" does not mean "must". A lender can refuse to accept any appraisal at their discretion.
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1 vote Thank Flag Link Wed Jun 22, 2011
Normally, the FHA appraisal cannot be used.
1 vote Thank Flag Link Wed Jun 22, 2011
Yes, they can if the appraisal is less than 120 days old by they fund the loan. HOWEVER, most lenders, when using "conventional" financing will want their own appraisal completed and usually at the buyer's expense. If you are purchasing a HUD home as a "owner occupant" you should obtain FHA financing. If you are purchasing a HUD Home as an "investor" you are likely already familiar with the lender's terms and conditions. You can find more info on this at http://www.hudpemco.com and http://www.hud.gov or call 1-800- call-FHA.
Web Reference: http://www.guyfoxwell.com
1 vote Thank Flag Link Wed Jun 22, 2011
No. The appraisals are much lower for FHA than conventional. It is better to finance with conventional loan on a HUD home, because you do not have to come out of pocket for the difference of your bid (if your bid is accepted). HUD homes have already obtained their (FHA) appraisal- the list price! FHA appraisals are what that particular home is worth in it's as-is condition (no repairs). If you finance with conventional loan, whatever dollar amount you bid over the list price is financed (minus your down payment of course!). You will need to order a conventional appraisal for your conventional loan (which is higher than FHA appraisal), and if the conventional appraisal comes in at your bid or higher, you can continue to close. If the conventional loan comes in lower than your bid, you will then have to come out of pocket with the difference because your lender will not allow you to finance more than what the home is appraised for or attempt to negotioate. If you negotiate the price of the HUD home, you risk losing it, there are investors dying to snatch up a good deal on a HUD home. Hope this helps buyers!
0 votes Thank Flag Link Fri Jul 5, 2013
In short, the answer most likely is no. It is considered a 'new assignment' by most if not all appraisers and lenders.

If the new loan will be with the same lender, you can try and see if your lender can request that the appraiser change the appraisal from FHA to conventional or conforming. If they agree to do this, you will be charged an extra fee, but it won't coast as much as a full appraisal.

But don't get your hopes up. Most likely the lender will order a new appraisal, and you will have to pay for the 2nd appraisal.
0 votes Thank Flag Link Wed Jun 22, 2011
You should ask your conventional mortgage lender directly.
0 votes Thank Flag Link Wed Jun 22, 2011
the answer is yes

Geistindianahomes.com
0 votes Thank Flag Link Wed Jun 22, 2011
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