Your mortgage lender might not require you to have a house inspected before you buy, but it’s probably still a good idea. Your lender will require an appraisal before it approves your mortgage application. Make sure that you understand the difference.
What Is a Home Inspection?
A home inspection is designed to protect a buyer. An inspector assesses a house’s condition and looks for major structural defects and safety issues.
An inspection report can give you a much more accurate picture of a house’s condition than you could get just by looking around on your own. Many types of issues, such as faulty electrical wiring, HVAC problems, a damaged roof and a cracked foundation, aren’t immediately apparent.
What Is an Appraisal?
An appraiser looks at a house’s size and features and compares that home to comparable properties in the area that have recently been sold. Based on that information, the appraiser calculates the house’s current market value.
Do You Have to Get a Home Inspection and an Appraisal?
Buyers often assume that a home inspection is required. A mortgage lender might not require an inspection, or it might require a limited inspection that only looks for specific types of damage.
Even if your lender doesn’t require a home inspection, it’s probably in your best interest to get one. You may be relieved to learn that the house you’re interested in buying is in good condition overall, or you may be shocked to learn that it has a major issue. Either way, you will be able to make an informed decision about whether to buy it.
If you purchase a house assuming that everything is fine and later discover that it has a serious problem, you can find yourself facing unexpected and costly repair bills. A home inspection can cost hundreds of dollars, but it might save you thousands later on.
An appraisal is designed to protect a lender. Before a financial institution provides you with money to buy a house, it will require an appraisal so the company can be sure that it’s making a good investment. A lender doesn’t want to approve a mortgage for more than a property is worth.
If an appraiser notes a significant problem, your mortgage lender might require a home inspection to get additional information. After reviewing the inspection report, the company will decide whether to approve your mortgage application. If a home inspection reveals a serious issue, the lender may deny your loan application or may require repairs before the sale can move forward.
