Appraisal, Costs, Assumption, and Prepayment

The FHA requires a specific type of appraisal that does more than just determine value; the appraiser must also inspect the property for minimum health and safety standards. If specific defects are found, they must be repaired before the loan can close. Regarding closing costs, FHA rules dictate which fees are allowable and restrict the amount the seller can contribute to the buyer’s closing costs. FHA loans are also assumable, meaning a buyer can take over the seller’s existing FHA loan, provided the new buyer qualifies and is approved by the lender. Finally, FHA loans do not carry prepayment penalties, allowing borrowers to pay off the debt early without a fee.