Home Appraisal and Home Inspection When Buying A Home
Protect yourself with an Appraisal and Home Inspection as part of your due diligence when you buyer.
The buyer has the opportunity to hire a licensed home inspector to do a home inspection.
An appraisal is property of the lender, and required by the underwriting guidelines. Recently (2017 update) required by the lender. This is how the lender decides how much money to lend you to purchase the home.
During the appraisal process, the appraiser is looking at the condition of the property and trying to determine if the home is habitable.
An appraiser is primarily looking at three things in regards to the condition of the home:
- Safety: Protect the health and safety of the occupants
- Security: Protect the security of the property
- Soundness: Conditions affecting structural integrity
Common Repairs Required by Lender
- Leaking or worn out roofs
- Lead based paint in homes constructed prior to 1978
- Faulty electircal, plumbing or heating
- Exposed wiring and uncovered junction boxes
- Active and visible pest infestation
- Rotting window sills, eaves and support columns on a porch
- Smoke detectors
- Carbon Monoxide detectors
- Leaning or broken fences
- Water heater straps
This is just a small list of required repairs that would prevent you from getting approved for a home loan. Different loan programs may require different inspections or repairs.
Appraisal Inspection
Conventional loans tend to be the most lenient, FHA and VA home loans tend to try to protect the buyer more and are often considered more “strict”.
Strict, actually translates into greater buyer protection, whereas conventional tends to lean more toward buyer being responsible for doing your own additional inspections to protect yourself.
Government loans will typically require a more thorough appraisal inspection that has been likened to a cross between a Conventional appraisal and a home inspection.
Home Inspection
Besides the appraisal required by the lender, a home inspection can also be performed at the buyer’s expense. This is highly recommended and should only cost a few hundred dollars or less.
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Often repairs found during a home inspection are for the buyer’s awareness only and are not required by the lender to provide financing on the home.
Repairs found during a home inspection may or may not need ot be paid for by the seller depending whether or not the repairs could affect safety, security or soundness.
Most lenders or loan types do not require that a home inspection be done, but it’s a good idea to always hire a home inspector if for nothing more than knowing what you’re buying.
A home inspection tends to be much more detailed and can seem like there are a lot of things that need to be done, but the reality is that most things found in a home inspection are minor and cosmetic at best.
Protect Yourself
For home buyers or home owners with 20% or more equity, both Fannie Mae and Freddie Mac may give you an automated underwriting approval with no appraisal required.
For home buyers, the home inspection is most likely a part of your purchase contract, and your right as a buyer. Doing a home inspection is part of the due diligence process.
If you have questions about being smart about buying your next home, doing your due diligence, and having a great team will put you out in front of the competition.
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