Home inspections: What does your lender require?
Many homebuyers have questions about what type of home inspections are necessary when applying for a purchase loan. Here, Mark Wells at Preferred Financial Services fields questions about the various loan programs and their requirements.
I understand that the appraiser is supposed to do a home inspection when he appraises the house. Is that right?
Not entirely. For a conventional loan, the appraiser is not required to inspect the property beyond a cursory check of the “marketability” of the house. If he or she sees something that would render the house unmarketable (technically called functional obsolescence), it must be noted in the appraisal and fixed before you can close your loan. This is not a thorough inspection and does not assure that basic home systems are in good condition.
Don’t FHA, VA, and RDA lenders require their appraisers to inspect electrical and plumbing systems?
Yes, all government loans require a minimal inspection by the appraiser, but only to the extent that they can certify that the systems are “working.” FHA and RDA appraisers must certify that the electrical panel box has circuit breakers (not fuses), must verify that when you turn on the faucet water comes out, that when you flip a switch the lights come on, must certify that the roof will last at least five years, and that the house meets area insulation standards. But that doesn’t tell you much more than what you might find out yourself by going through the house.
Then do these lenders require a full home inspection from an independent inspector?
No, other than the VA’s requirement of a termite inspection, lenders do not require a home inspection on a purchase loan.
Am I wasting my time and money on a home inspection since the lender doesn’t require one?
You should use common sense, erring on the side of caution if you are in doubt. For homes less than seven years old, I see no major reason for a home inspection unless the house has been vacant for quite a while. If the home is 7-15 years old, a home inspection can identify expenses you may incur in the coming years, and help you determine how much to pay for the house. If the house is over 15 years old, a home inspection is a good way to identify problem areas and indicate what quality of home you are buying.
Is there any inspection you recommend in every case?
Every home should have a termite inspection. Our area’s mild winters almost guarantee that your house will have termite problems at some time, no matter how well the house was originally treated. Termites can do tremendous damage, often unseen. A professional inspection can tell you if you have active termites, and it comes with an added bonus of telling if you have a mold or mildew problem in the crawl space.
Author: Mark Wells
Wells welcomes questions or comments!
Phone: (864) 235-9596