Why is my FHA lender conditioning my FHA AS IS appraisal?

Question

i am looking to closing a purchase on a hud home with FHA financing. although i was told by my broker that the appraisal is AS IS, the FHA lender is needing some conditions to be met: furnace inspection, electrical, and plumbing- all done by certified contractors. my lock expires next week and this will hold up my funding.

my question is, since the appraisal is deemed as is, why is the lender asking for these inspections to be done?

i have completed a home inspection which cost me $300.00, but they are saying that the home inspection that i have is not sufficient enough to meet what they are looking for: completed inspections done by certified contractors.

again, why are they conditioning for this, when the appraisal is an FHA AS IS appraisal?

please help. thanks.

Answer 1

If there are MAJOR defects, they don't want you to end up defaulting on the loan

Answer 2

House must meet FHA standards. The furnace must be inspected, and it must be verified that it is operational. The appraiser had to say "as is," since the furnace was not on. I have not heard of the need to have certified electrical contractor inspecting the electric.  After, they are not inspectors. Same thing with the plumbing.  If the electric was turned on, the the water was turned on, then the appraiser should have been able to verify that faucets work, toilets flush, etc.

Answer 3

These are  standard  FHA practices. It may depend on the condition and the age of your home that they are requiring inspections to verify there aren't any major problems and that it's operating. The reason there is an AS/IS clause is that FHA doesn't want to be held liable should your furnace or plumbing, etc. give out six months down the road.

Paying for a separate home inspection as you did is a good thing - always have one completed anytime you purchase a home.