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Why You Should Get a Home Inspection Report When You Buy a Home
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Why You Should Get a Home Inspection Report When You Buy a Home

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience
Home Inspection Report Overview

A home buyer typically orders a property inspection report after his or her offer to purchase has been accepted by the property seller.  Home inspection reports are not mandatory and the property buyer decides if he or she orders one.  In some cases the property seller provides a home inspection report to all prospective buyers but we recommend that home buyers order their own, independent report.

When you order a property inspection make sure you are working with a licensed, reputable inspector. We recommend that you use client references and referrals to find a capable and qualified inspector. Spending extra money on a property inspection can help you avoid finding significant issues with the property after your purchase closes and save you thousands of dollars in the long run. Property inspection reports are usually several hundred dollars so they are a worthwhile investment compared to the cost of significant home repairs or renovations.  Additionally, in some cases you may be able to negotiate a lower property purchase price based on the inspection report findings.

The property inspection is performed by a licensed professional who identifies potential issues with the property such as termite damage, electrical or plumbing defects, structural issues or a roof that needs repair. After reviewing the inspection report, the buyer and seller negotiate who pays for any issues that need to be addressed prior to completing the sale of the property. In some cases a seller may be willing to pay for all of the required repairs while in other cases the seller may not be willing to pay for any of the required repairs.  Either way, it is much better to be aware of any significant issues before you buy the property.

How a Home Inspection Report Can Affect Qualifying for a Mortgage

It is important to identify any property issues that need to be addressed at the start of the process so that they do not delay or prevent you from closing your mortgage.  The lender orders an appraisal to determine the value of the property and in some cases the appraiser may identify issues with the property that need to be corrected before you receive final underwriting approval.  For example, the appraisal report may note roof damage that the lender requires you to repair as a condition to your mortgage closing.  Repairing the roof damage may cost thousands of dollars and take weeks to fix.  

In short, an inspection report enables you to learn about property issues before they are identified in the appraisal report. That way you know about any significant property repairs before the lender does and you can be proactive in addressing them or negotiating fixes with the property seller. Knowing about issues early on enables you to avoid being surprised by any additional costs or delays in the mortgage process.

Additionally, if there are multiple issues with the property it may result in a lower appraised value which can make getting a mortgage more difficult. When the appraised property value is less than expected this is known as the appraisal coming up short. In this situation you may be required to increase your down payment, lower your mortgage amount or try to negotiate a reduced purchase price with the seller. These are the last things you want to be doing in the middle of getting a mortgage. In a worst case scenario, significant property damage issues can cause your mortgage application to be rejected.  A home inspection report enables you to address issues before you apply for your loan or at least be aware of them so unexpected surprises are diminished.

The best approach for the borrower to take is to identify and address any significant home inspection issues early in the home purchase process so that they do not interfere with your mortgage being approved.

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Related FREEandCLEAR Resources

Sources

"Understanding the Home Inspection."  My Home by Freddie Mac.  Freddie Mac, 2018.  Web.

About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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