Finance Your New Home in Missouri or Kansas with a Mortgage from Homestead Financial
Most buyers will tell you that they await an inspection report with baited breath. For some, receiving this report is the make-or-break moment, depending on what it contains. Major repairs may be a dealbreaker, but good news in an inspection report lets homebuyers breathe a massive sigh of relief.
The home inspection is one of the most important steps in the homebuying process because it gives you a good idea of what you can expect to deal with in the home you’re looking to buy, and what repairs you should begin planning for. Savvy home-buyers know they can use the inspection report to their advantage – and they know what to watch for in the pages of the inspection document.
Check Your New Home for Foundation Issues
Foundation repair can be quite expensive, depending on what needs correcting. Most foundation problems are common, especially if you’re looking at an older home. The most obvious signs of foundation issues are cracks.
Foundation cracks, or cracks in the floor or wall inside the home are usually due to the structure settling and shifting, thanks to expanding or contracting soil, inclement weather, or flaws in the building materials. Vertical cracks are the most common and usually aren’t much of a cause for concern because drywall runs in the same direction. However, horizontal cracks, especially those at least ¼” wide, can indicate a larger problem. These horizontal cracks usually mean that the house is settling more than normal, and that the house foundation is under serious pressure. On the exterior of the home, stair-step cracking in bricks can also indicate an issue.
The home inspector you hire to look over the house you want to buy may be able to offer you additional information about the severity of the home’s foundation cracks or settling. You may want to hire an inspector who specializes in foundations to ensure that you are fully informed about any problems you may need to correct over the duration of your homeownership, or repairs that you may want to request the seller pay for before closing.
Getting a Home Loan for a House with Old Wiring
A home built in the 1930s or earlier was likely originally wired with a method called knob-and-tube. Knob-and-tube wiring gets its name from the ceramic knobs and tubes that encase copper wiring responsible for carrying electricity throughout the house. By today’s standards, knob-and-tube wiring is dangerous for a couple of reasons:
- The fabric and elastic coating that covers the copper wiring wears away over the years, leaving live wire exposed in your home.
- Knob-and-tube wiring has no ground wire – an important safety feature that offloads excess electricity from your home; without a ground wire, you risk overloading circuits and starting a fire.
If your housing inspection finds knob-and-tube wiring in the home you’d like to buy, you will need to proceed with caution. First, check with homeowners insurance companies to verify that they will provide coverage for a home with existing, functional knob-and-tube wiring. Many either won’t at all, or will charge you a hefty premium to do so. If you are unable to get insurance, unfortunately, you are not likely to get a home loan on a house with knob-and-tube wiring. This is because mortgage lenders require you to have a homeowners insurance policy before they’ll close on your home loan.
The upside is that if the home inspection reveals knob-and-tube wiring, the seller may need to remedy it before selling the home anyway, since the only people who could purchase the home are those willing to pay extra for insurance or who have cash to pay for the price. Depending on the size of the home and how much knob-and-tube is left inside, rewiring the home can cost anywhere from $2,000 to $15,000 or more. Your real estate agent can help you with next steps should your inspection find knob-and-tube.
Solve Leaky Roof Issues Before Closing
It’s nice to own the roof over your head, but if that roof has seen better days, it’s suddenly not so great. Roofs are another pricey home component to pay to fix, which is why it’s worth taking a hard look at what your home inspector has to say about it.
Depending on what type of roof has been installed on the house you’re looking to purchase, you may still have quite a bit of life left in it. For example, roofing made of slate, copper, or tile can last more than 50 years. Wood-shake roofs are known to last up to 30 years. Fiber cement shingles last about 25 years, and composition roofs made of asphalt shingles last about 20 years. Of course, these lifespans depend upon climate and weather conditions.
Your inspector will not only look at the shingles on the roof, but they will also check the condition of the interior of the attic – if the home has one – to look for signs of leaks, wood rot, or other damage. Old water damage may be visible, especially if the roof was previously repaired. Looking at the disclosure paperwork the homeowners provided when they listed their house for sale can help you determine what damage is new and needs fixing, and what is older.
Do Your HVAC Due Diligence
Electric and gas HVAC systems, like central air conditioning and furnaces, usually last about 20 years, especially if they’ve been well cared-for. You may see some outliers – like a 50-year-old furnace that’s inefficient, but still going strong – or a much newer piece of equipment that has never been maintained and reaches the end of its useful life after a decade.
Your home inspector will look at the age and condition of the HVAC equipment installed in the house and indicate whether it is serviceable or needs replacing. You may be able to get more time out of an HVAC system by babying it – switching out filters every month, enrolling in an annual service plan with a local HVAC company, and running it only when necessary – but unfortunately, even handling it with kid gloves won’t prevent major coolant leaks or mechanical issues that spell out the demise of your equipment.
While buying all-new equipment and paying to have it installed can be pretty pricey – nearly $10,000, depending on the size of the equipment and its SEER rating, for example – it’s not nearly as expensive as, say, a whole new roof or major foundation repairs. And, when you upgrade the existing equipment, you’ll find that you save a lot of money on your energy bills, which will more than cover the cost of the new equipment after a couple of years.
Home Maintenance Tips from Your Inspector
Carefully read through the report your inspector assembled after going over the home you’d like to buy with a fine-toothed comb. You may be surprised to find that your home inspector, in addition to pointing out areas of concern with the home, will also provide you with great maintenance tips should you move forward with purchasing the house.
Especially look for maintenance tips related to your heating and cooling system, roofing, chimneys, and landscaping. You may be surprised at what you learn, like trimming back decorative bushes around your home can reduce the risk of an insect infestation, or extending your gutter downspouts by six feet may prevent dampness in your basement. These minor fixes are something to keep in mind over the years you own your home – and then they won’t come up again in future inspections should you decide to sell again.
Housing Requirements for an FHA Loan
Save for major structural issues that would make the home unsafe to live in, conventional loans will allow you to purchase a home that needs a little TLC. However, if you are approved for an FHA loan through your mortgage lender, the results of your inspection report and subsequent appraisal may affect your loan.
This is because these government-back loan programs require home systems to be in good, working condition. Originally a way to ensure lower-income families could afford to purchase a quality home, FHA continues its tradition of holding homes to a slightly higher standard. FHA doesn’t care that the house is aesthetically updated, but it does care that the main systems of the home are in good shape: foundation, roof, windows, and HVAC included.
In general, the main property requirements are that the home must be safe and secure, so your appraiser will look for any reason that the home may not be. The house doesn’t have to be perfect, it just can’t be unsafe. FHA’s strict property guidelines for home loans are one disadvantage of them compared to a conventional loan, but look at this way: you can be confident that should your house meet the guidelines, you are getting a quality home that you can happily live in without making large repairs.
Should your home not pass the FHA appraisal process, you can consider taking out an FHA 203K home renovation loan, also called a 203(K) Rehab Mortgage from the U.S. Department of Housing. Be forewarned that not every mortgage lender offers a 203K loan.
Find a Home Loan with a Low Interest Rate
Now that you can read over an inspector’s report with confidence because you know what notes to watch for, you might feel better prepared to begin the home-buying process. Step one is to get pre-approved for a home loan from a mortgage lender. At Homestead Financial, we’ve built our reputation on our customer service because we want all our clients to get into the home they deserve.
Our low-interest home loans are some of the best in the states we serve: Arkansas, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, Ohio, Tennessee, and Texas. Contact us today to learn more about the home loan products we offer that are right for you.