The purchase of a home is normally the single largest expense any individual or family will have in their lifetime. When spending a few hundred thousand dollars on a piece of property, it is important to protect the buyer and lender from fraud and misrepresentation. For a few hundred dollars, a home inspection will identify any issues with a property and provide a detailed report to all parties. In most situations, the organization providing mortgage financing will require a home inspection before finalizing a loan.
So instead of "why do I need a home inspection?" maybe it should be "why is a home inspection so fundamentally important?" Cost alone isn't the only concern when purchasing a pre-existing property. Many new homeowners are on limited budgets and may be putting every dime they have into the initial down payment. The last thing a new homeowner wants is to be confronted with replacing a roof or dealing with a termite infestation which could add thousands of additional dollars in expense. As the prices of products and services go up, the more important it is to protect yourself and your money.
Most individuals are unable to pay for a residential or commercial piece of real estate with cash out of pocket. This means the majority of home sales will require lender financing in the form of a mortgage. Much in the same way that a car title is held by a bank or credit union until an auto loan is paid in full, a mortgage loan works in a similar fashion. A mortgage lender is responsible for the property should the borrower be unable to make continued mortgage payments and the property falls into foreclosure. A lender does not want to be stuck with a property worth $100,000 that they issued a loan for of $150,000. This also brings up an important second point. Some individuals in the real estate industry will collude to defraud mortgage lenders. A key aspect of mortgage fraud is issuing false appraisals and inaccurate home inspections making a property appear to be worth more than it actually is. As a result, many lenders work only with home inspectors and appraisers they trust.
Once you've selected a licensed and reputable home inspector there are certain expectations which should be fulfilled during an inspection. A typical home inspection will take between two and three hours and will thoroughly examine both the interior and exterior of the home. The inspector will focus on problem areas like a damaged and leaking roof, termite infestation, a crumbling foundation, mold and mildew, electrical and plumbing issues and general structural integrity. A home inspector doesn't just focus on major points and a thorough job should pick up even the smallest issue. A loose tile in the bathroom or a leaky faucet in the kitchen should also appear on a detailed home inspection report.
It is customary for the buyer, seller and real estate agents to be on hand during a home inspection to ask questions and follow the process. While not required, it is recommended for the buyer to be present. It is also important to ask additional questions during the inspection to clarify what is or is not a major issue. Most home inspectors will be happy to explain what they are finding during the inspection. Once the inspection is complete you should be provided a detailed multipage report in addition to digital images online or in a physical format for future reference. This is all valuable information which can be used during negotiations.
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