Do New Homes Need Inspections
While new homes in Canada will often come with some degree of warranty protection, its always possible that some of the thousands of elements that comprise a new home are faulty. Getting a home inspection for your new build allows the chance for buyers to get ahead of any potential issues.
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What To Do With The Results Of A Home Inspection
You and the seller each receive a copy of the inspector’s report. Where you go from there depends on you, your realtor and the seller. Here are some next steps you can take once youve received the results of a home inspection:
- Go ahead with the purchase as it stands. You’ll know what you’re getting into and have an idea of how much itll cost to make any necessary repairs.
- Ask the seller to make the necessary repairs. This can be made a condition of the closing.
- Use the inspection report details to negotiate a better price with the seller. The inspection report may prove that the roof needs $30,000 in repairs. The seller might reduce the cost of the home to cover those repairs.
- Walk away from the deal. Some purchase contracts have a home inspection contingency that allows you to back out without any penalties or loss of earnest money if the home inspection isn’t satisfactory. This isn’t an ideal solution, but it may be the most affordable option if the needed repairs are expensive.
Home inspections are an important part of the homebuying process. Getting a good idea about the state of the home youre buying means theres less chance of nasty surprises in the near future. You may also want to go over the inspection report with your Home Lending Advisor and discuss your options as you make your way through the homebuying process.
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House Inspection Checklist: What To Look For
After conducting research and vetting options, you should have a professional home inspector you can rely on who knows what to look for in each part of the home. However, understanding what the inspector is looking for can help you ask questions to better understand the extent of the damage. This checklist is a comprehensive overview of what to look for in a home inspection.
Limiting Risks Related To Any Possible Latent Defects
An inspector is more likely to see potential issues, but theyre inspecting the accessible areas, so there may nevertheless be latent defects despite their thoroughness and competence. Hiring a certified inspector protects the buyer from certain kinds of professional wrongdoing. For example, if the inspector fails to examine the attic even though it was accessible and the buyer later finds out that its contaminated, the buyer can contest the inspection report and take action against the inspector who missed a visible and accessible defect.
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What Is A Home Inspection
Are Bank Appraisals & Home Inspections The Same Learn All About Appraisals And Inspections Inside
The term, home inspection, is very vague. When a buyer is purchasing a home they have the right to complete a variety of different types of inspections and there are many reasons to have an inspection when buying a home.
The most common inspection that is performed by a buyer is the general inspection of the home by a licensed home inspector, general contractor, or other buyer representative. A general inspection of a home is a detailed investigation into a homes plumbing, electric, HVAC systems, roof, and other aspects of the home.
While a general inspection is the most common, it is not the only inspection contingency that a buyer has the option to include in their offer. Below are 5 other common real estate inspection contingencies that a buyer could perform when buying a home.
Does Fha Require A Home Inspection
FHA does not require a home inspection, but they do strongly encourage it. FHA Appraisals act as both an appraisal and a minimal home inspection to verify that the house meets the minimum FHA standards. You can read more on the minimum FHA standards at the HUD.gov website.
An FHA appraisal and a home inspection are different in that a home inspector will perform a more thorough examination of the house. The FHA appraiser is looking to verify that the house meets the minimum FHA standards. FHA requires an FHA appraisal on all FHA loans.
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Fha And Va Loan Process Is A Little Different
The home appraisal process for FHA and VA loans is a little different, when compared to a conventional or regular mortgage loan. The Federal Housing Administration and the U.S. Department of Veterans Affairs do not require borrowers to have a home inspection. But they do require appraisals.
With a regular mortgage loan i.e., one that is not backed by the government the home appraisal determines the current market value of the property. That is its sole purpose.
But with a government-backed mortgage program, like FHA and VA, the appraiser must also review the property to ensure it meets the agencys minimum property requirements. So its sort of like an appraisal and a mini home inspection, all rolled into one.
Heres how the Department of Veterans Affairs explains the difference, in VA Pamphlet 26-7:
While VA-assigned fee appraisers must note any readily apparent repairs that are needed, it is important to distinguish the differences between a real estate appraisal and a home inspection report. The fee appraiser will not perform operational checks of mechanical systems or appliances.
Bottom line: A standard home inspection is not required for FHA or VA mortgage loans. But both agencies do require an appraisal to determine the market value, and theres a basic property review built into that process.
Consider Getting A Second Opinion
In a market thats largely unregulated, it may be worth getting the opinion of a second home inspector. Even within regulated provinces, buyers shouldnt expect the skill and experience level of all home inspectors to be uniform. Its always possible that an inspector might miss something important. To avoid possible conflicts of interest, hire and pay your own home inspector to work on your behalf, rather than home inspection companies chosen by the seller, listing agent, property management company, or any person/organization involved in the selling process. If youre working with a buying agent, you can ask them for a trusted recommendation.
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What Isnt Covered In A Home Inspection
A home inspection is fairly in-depth, but it doesnt cover everything. In particular, testing that requires special equipment will be performed separately.
For instance, home inspectors will not check for radon, a naturally occurring gas that can cause cancer. Youll need to order a radon test if the home hasnt had one for a while.
Home inspectors will not check for pest or termite problems, though if they suspect the home has a problem, they may recommend a pest inspection. And the home inspection will not uncover problems with mold or asbestos.
Finally, if you live in an area where wells and septic systems are common, youll have to hire a well inspector to perform a water quality test and a septic inspection.
Do Banks Require An Appraisal For A Mortgage
Purchasing or refinancing a home usually necessitates an appraisal, but some government refinancing programs, such as the VA interest rate reduction refinance loan or VA IRRRL, do not require one.
When you perform an appraisal of the home, the lender will know how much money he or she can lend you. They are licensed and have previous experience with real estate or lending. In most real estate transactions, two methods are used. Physical deterioration, as well as the cost of appraisals, are also taken into account when determining the value of a property. A home appraisal is used to ensure that the price is not excessive. They are also intended to protect the lender from lending more than the propertys fair market value. In order to purchase the property, the purchaser must make a down payment equal to the purchase price.
What if you are a qualified buyer who wants to avoid the hassle and expense of an in-person appraisal? You can reduce the amount of time you must spend on appraisal by obtaining an appraisal waiver. Mortgage lenders use data generated by an automated underwriting system to value homes. To qualify for an appraisal waiver, a qualified buyer must have an appraised property. As a result, you dont have to deal with the hassle and expense of an in-person appraisal. If you are a qualified buyer, you can skip the appraisal process entirely if you use an automated underwriting system.
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Mortgages And Home Inspections
While a home inspection is necessary when buying a home, mortgage lenders generally dont require one. In most cases, theyll only ask for a wood-destroying organisms report and an appraisal report. The former certifies that the property is free from destructive organisms such as termites and fungi, while the latter shows the propertys market value. These two reports help the lender know if the home is worth the money in other words, it helps ensure theyre not originating a home loan thats too risky.
That said, its worth noting that, in some rare cases, mortgage lenders may ask you to get a home inspection. For example, suppose the pest control or appraisal report highlights some structural defects in the home. In that case, the underwriter may require a home inspection to determine if the house is worth investing in.
What Does A Home Inspection Cover
Canadians face a unique weather system with extreme temperature and precipitation variations. Over time, this can take its toll on buildings. Its a good idea to select a local home inspector as theyll have a better idea of the risks specific to your climate. For example, Canadas west coast receives a lot of rain. So, a home inspector there is likely to pay specific attention to the building envelope while checking for water ingress, as well as checking the basement for mould.
While location-specific assessments can help to make the most of your inspection, all home inspections should be sufficiently comprehensive to identify major problem areas. Here are some of the basics that your home inspector will look for:
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Do Mortgage Lenders Require Home Inspections
Many people who are shopping for a mortgage have questions about what inspections they must have to get a loan. Whether you are buying a new home or refinancing an existing one, the mortgage process is generally the same.
So, do mortgage lenders require a home inspection? Mortgage lenders do not require a home inspection to obtain a home loan. You are encouraged to get a home inspection if purchasing a home however, the mortgage company will likely not require one.
Mortgage lenders generally will require an appraisal and a wood-destroying organisms report. Appraisals are used by lenders to verify the current market value is equal to or greater than the purchase amount. A Wood Destroying Organism Report certifies that the house is free of wood-destroying organisms like termites and fungi.
If you are buying a new construction home, it is always in your best interest to invest in having a home inspection done. There are some circumstances where your lender may require a home inspection, such as if the pest control inspector or the appraiser notes a structural defect. Lets look a little closer at each of these situations.
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Valuable Insight For Buyers
Both home inspections and appraisals can provide valuable insight for you, as the home buyer. The inspection in particular can be an educational and eye-opening process.
An inspector can explain the different systems within the home and how they work. He or she can also show you the location of important features, such as cutoff valves.
Buying a house is a big investment, so you want to know everything you can about the property before purchasing. Thats the primary reason for having it inspected. So while a home inspection might not be required in New Jersey, its generally a wise investment.
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Where To Find A Home Inspector
Use recommended inspectors. Ask your real estate agent, loan officer, and closing attorney for a home inspector referral. One of these professionals should be able to recommend you to a licensed home inspector in your area. You can also check with friends and family members who recently purchased a home.
- Professional trade groups. Professional trade organizations like the Certified Master Inspectors Board maintain a list of local experienced home inspectors with a minimum of 3 years experience, have performed a minimum of 1000 fee paid inspections, and are held to the highest ethical standards. You can locate a Certified Master Inspector at .
- State licensing board. Your state licensing board will have a list of all licensed home inspectors in your state. The list of home inspectors provided by the state will likely contain little info about the inspector other than if the inspector is Active or Inactive.
- Local building code office. While the local building code inspector does not inspect properties for real estate transactions, they will likely have a list of qualified licensed home inspectors available for hire.
- Hire a licensed building contractor or structural engineer. Home inspections may not be their primary business, licensed building contractors and structural engineers often provide home inspections services. State licensing allows these trades to provide a home inspection.
Home Appraisal Vs Home Inspection
Lets start by distinguishing the two kinds of property assessments. While they are often confused as being the same, home appraisals and inspections are actually different procedures with different objectives.
- A home inspection is a thorough but non-invasive evaluation of the propertys overall condition. The American Society of Home Inspectors defines it as an objective visual examination of the physical structure and systems of a house, from the roof to the foundation. The primary objective here is to assess the condition of the property.
- A home appraisal is a review of the property to determine its fair market value, based on current real estate market conditions. The appraiser will prepare a comprehensive report that includes sales data supporting his or her determination of value. Here, the primary objective is to determine the value of the property.
So there are some similarities between home inspections and appraisals in New Jersey. With both of these procedures, a trained and certified professional will review the home inside and out. The inspector is primarily concerned with the condition of the property . The appraiser is primarily concerned with the market value of the home.
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What Is The Replacement Cost Approach
As an additional check on the value of the property, the appraiser also estimates its replacement cost. Replacement cost is determined by valuing an empty lot and estimating the cost to build a house of similar size and construction. Finally, the appraiser reduces this cost by an age factor to compensate for depreciation and deterioration.
Home Inspections Optional In Washington State
Many home buyers in Washington pay for a comprehensive home inspection before purchasing a house. Its a wise investment, especially when you consider how much is on the line during a real estate transaction.
But what is a home inspection exactly?
Definition: a home inspection is a thorough and detailed evaluation of a house to determine its current condition. Theyre a common part of the real estate process. Inspectors examine various aspects of a property, including the foundation, roof, electrical and plumbing systems, and more.
In Washington state, home inspections are not required for a mortgage loan. But theyre still a worthwhile investment because they shed light on the true condition of the property.
The average home buyer does not have the training or expertise to fully evaluate the condition of a house. Thats where home inspectors come into the picture. These individuals receive specialized training to evaluate residential real estate and to identify potential issues and items needing repair.
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