Part of the reverse mortgage process involves an appraisal to determine your home’s value. The amount of money you receive from a reverse mortgage is determined by your age and the home’s value. When having your home appraised, there are a few things you should know and prepare for to make the appraisal go as smoothly as possible.
The Federal Housing Administration (FHA) requires an appraisal to determine the value of your home and whether it is safe and structurally sound. You can expect the licensed appraiser to inspect the home for anything that may be a risk to your health, safety, and the condition of the property. Most of the time minor cosmetic issues are not a concern.
A home appraisal typically costs about $300 to $400, with a national average of $339. However, home appraisal quotes can start at $600 in some metropolitan areas, and fees can exceed $1,000 for larger or more complex properties.1
A licensed appraiser will come to your home and inspect both the interior and exterior of the dwelling.
For the interior, the appraiser will do a walk-through inside the home. They may turn on and off light switches, run water in the sinks or flush the toilet and are required by the FHA to visually inspect the attic and crawlspaces. The appraiser will take notes, draw a diagram of your home, and photograph the interior.
For the exterior, the appraiser will inspect the outside of the home, including the roof, windows, and foundation. They will take pictures and measure your home. If there is a well and septic tank, the appraiser will need to measure the distance between them and the home. The appraiser may also include any areas that need repair.
Although it varies, a typical inspection takes about an hour to complete and there are a few things you can do that will help the appraiser during the inspection.
Provide unobstructed access to the attic and crawlspace. The appraiser will need to look inside. Make sure smoke detectors and carbon monoxide detectors are installed and functioning. Make sure the water heater is properly strapped. Appraisers will not judge based on the cleanliness of your home. However, decluttering can help the appraiser see your home better.
The appraiser will look at comparable homes in your local area to determine your home’s value as part of the process. They may need a few days to complete the entire appraisal report and submit it to the lender.
The FHA will perform a risk assessment to determine if the appraisal is acceptable. Under certain circumstances, the FHA may require a second property appraisal after completing the risk assessment.
Prepare for the Inspection
Provide unobstructed access to the attic and crawlspace areas. The appraiser will need to look inside. Smoke detectors and carbon monoxide detectors are installed and functioning properly. Make sure the water heater is properly strapped. Appraisers will not judge based on the cleanliness of your home. However, decluttering can help the appraiser see your home better.
If you have questions about the reverse mortgage appraisal process or about a reverse mortgage in general, call 1-800-976-6211 to speak with a licensed loan advisor.