In a lot of cases when you’re asking for a loan, the lender will ask for a mortgage on the property. They will also ask for a thorough home inspection done by a licensed professional. Some people are not aware of why this needs to be done.
In this article, we’re going to go through the issue and explain exactly why buyers should have a home inspection before closing the deal with the lenders. If you want to learn more on the subject, keep on reading and see for yourself why this is crucial.
What is a home inspection?
Before closing the buy-sell deal, in many cases, you’ll be asked to do a home inspection. This is not something you need to be asked, it is wise to do it in your interest especially if you’re the one who’s buying. The reason is simple – it provides a perfect insight into the place.
The professional home inspector will come to the location and do thorough research to find any flaws or potential dangers. They inspect the walls, the pipes, the lights, and anything that might be a reason for worry.
When they go through the entire place, they are going to make a list of conclusions. You’ll easily see what’s wrong with the place, what needs to be fixed, how much this will cost, and what is the momentary value of the place.
Now let’s see why exactly it is smart to call one in detail. See why the mortgage lenders require one before they give you the loan.
Provides perfect insight into the real estate
When the home inspector arrives, the first thing they will do is to measure the place. They will see how big it is, and is the same size as the documents say. Sometimes, due to various issues, this number isn’t the same. They are not going to do anything special with it but will put it in the record.
Then, they will continue with the exterior. They’ll check how are the walls, the outside of the window, and the yard. Anything they might find suspicious or different from what was provided as information for the lenders will be placed in the list.
They’ll continue with the inside of the property. They’ll check the same things from the inside. How are the walls, is there any moisture, are some of the walls damaged, what is the condition with the ceiling and the floors, etc.
Another highly valuable part of their inspection is to check out what’s the condition of the appliances and the infrastructure. For example, what is the way the place heats and cools? Is the HVAC working? Are the pipes clean, and are they functioning properly?
Everything is valuable here because if any of this needs repairs, it means the next owner will need to invest in it. They’ll see the boilers, the pipes, and the faucets, even the lighting is an important part of their inspection. If they find something, they’ll write it down.
Evaluates the exact price
After they are done, they’ll sit down to calculate the exact price that place is worth. This may be done on the place, or they might go back to their office and do it there. In both situations, you and the lender will get the report and see what needs to be done, and what is the real price of the place.
This is highly valuable for the lenders because in case you or whoever is getting the loan stops paying the rates, they’ll get ownership of the house. If there are too many malfunctioning and broken parts inside, they’ll need to cover the expenses and get nothing in return.
Because of this, the lender is trying to protect their investment. If you’re looking for $500,000 and the house is worth only $400,000 according to the inspector, but you claim it is worth 750,000, they need to have a way to see who’s right.
If the house isn’t worth as much, the lender will offer a different amount. If the inspector says that it is worth more than you’re asking for, you’ll have no problem getting the loan. You’ll probably be offered even more than the amount you’re asking for.
Makes sure the lender gets what they invest
The procedure in case you’re not paying your monthly rates is to take the property from your ownership. Legally, if you’re not able to pay, or you refuse to do it, they have the right to ownership.
When they have the papers ready, they’ll most certainly put it on the real estate market. They’ll offer it to the buyers. The price they’ll get varies, but with the help of the inspector, they will surely ask enough to cover their loss from you not paying the rates.
In many cases, the lender is profiting tremendously from this act. Property can rise in value over time. If your house was worth $450,000, they might put it up for $400,000 and the auction might give them a couple of hundreds more making them earn a fortune out of nothing. Learn more about how the real estate market works and how property is bought and sold on the link.
However, this is not always the case. In most cases, the lenders will appreciate a lot more when you pay the rates regularly and they don’t have to worry about it. Getting the ownership and putting it up on the market is complex, exhausting, and not always provides the required money.
These three key reasons why lenders hire home inspectors above tell you why this profession exists. It’s an amazing profession, though. A person who’s just making notes about people’s homes not worrying about them is wonderful.
However, they need to be highly skilled and professional. They need to know a variety of different fields and be experts in them. This is why they are almost always well paid by the people who hire them. Their reports are highly valuable.