Before closing your dream home, there is one step that can save you from expensive surprises. It’s a house inspection. This thoroughly checks the structure and functionality of the home, looking everything from the roof, foundations, plumbing, and more.
But do house inspections need to be done on a loan? Most lenders don’t need to inspect your mortgage home, but they may still be necessary to close.
Whether you’re buying a home in Philadelphia, PA or finding your dream home in Phoenix, Arizona, testing could soon go from optional to mandatory. This is when a home inspection is important for your mortgage, and why it’s worth getting it.
Do I need to have a mortgage test?
No, most mortgage lenders don’t need to inspect their home.
However, lenders almost always seek a home evaluation. This is an assessment of the value of the home. This will reduce the risk and ensure that the loan amount matches the actual value of the property.
For traditional loans, the appraiser focuses primarily on value, not on overall condition, unless there are any major issues that could affect livability or resale.
However, home inspections are still an important part of the home buying process. What was discovered during home inspections could be a trade breaker for some buyers, and potential issues revealed during the assessment or insurance process could continue to close.
Evaluation vs. Home inspection: What is the difference?
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Most lenders don’t need a home inspection to approve a mortgage. However, if the assessment raises concerns, or if the insurer needs it for coverage, it may be necessary.
Do government-supported loans require a home inspection?
Loans with more stringent requirements, such as FHA, VA, or USDA loans, typically do not require a technical home inspection to qualify for a mortgage. However, some government loans may require specialized safety testing for pests and mold. This falls outside the scope of a standard home inspection before approving the loan.
This is known to meet the minimum property standards for these non-competitive loans. In the case of government loans, the appraiser will perform a much more thorough safety inspection during the assessment process. Any revisions found in the assessment of a home financed by government loans must be completed before the loan is issued.
If you need to have a house inspection anyway
While most mortgage lenders only want valuation reports, there are still situations where inspections may be required to secure a loan.
Lenders are concerned after valuation
While the valuation is primarily intended to assess the value of the home, issues discovered during the process can encourage lenders to ask for a full home inspection before approving the loan. Some corrections found in the test may be essential to ensure funding.
Pest or WDO tests
Certain states or loans may require pest or wood-depleted organisms (WDO) testing, particularly in humid areas or locations known for termites, such as Miami, Florida or Washington, DC. If evidence of pest damage is found, a more thorough inspection may be required to determine the extent of repairs.
Insurance requirements
Insurance companies may order their own inspections, particularly for older homes, high-risk areas, or recently renovated homes. Therefore, you can assess the risk of liability before issuing a policy.
Even if the lender doesn’t ask for a home inspection, you cannot close your loan without insurance. Insurance may be subject to inspections.
Should I still have a house inspection? – Even if it’s not necessary
Even if you don’t need a lender, home inspections are one of the smartest moves that buyers can make. Because home inspections cost less, this report can provide peace of mind and allow you to pay your investment upfront by identifying costly issues before closing.
If a major issue is listed in the home inspection, the buyer can ask the seller for repairs, negotiate the price, or leave the home. The test can reveal issues that can affect your ability to obtain insurance in advance or delay funds.
in short? While no home inspection is required, it is a highly recommended step in the home buying process and may even make the lending process smoother for all involved parties.
