The phrase “failing a home inspection” is loosely defined. I think there are degrees of failure.
A failure is basically something found in the inspection that is such a big issue that an appraisal would find it and then the lender, such as Chicago Patrolman Credit Union, wouldn’t take the loan. That is a clear definition of a home inspection failure.
The lender is going to see the failure when they do their appraisal. The lender’s appraisal is always done after the home inspection, generally a week to ten days after.
Deal killers found during home inspections are typically foundation or asbestos issues. The latter is especially true in Chicago where pipes were insulated with asbestos back in the day. Attics could also have asbestos issues. In areas where humidity and moisture traps are common, asbestos can cause very difficult problems. These issues would likely be deal killers.
Major problems like the ones mentioned are almost certainly going to be listed on an appraisal and will be notified as deferred maintenance. Deferred maintenance is not a term you want to see as a loan officer trying to help someone with a police home loan. In this scenario, the property needs work and that has to be repaired prior to closing. The property then has to be reinspected by the appraisal company.
Now there’s another layer of concern there. The general rule of thumb is that if you’re at a point where a home fails inspection, the eye test probably would have already been enough to lead you to believe it.
If as the potential buyer, you were completely caught off guard by something in the inspection report that’s a big deal. In these cases, it’s possible that the seller didn’t allow access to an area of the property. That’s definitely a problem.
That’s a red flag. At Police Mortgage, we advise our first responders to have access to everything on the property they are thinking of purchasing. For instance, if you don’t have access to the utility room that creates a lot of suspicion. A good attorney will point that out to the client as well.
However, there are degrees of failure. If it’s something innocuous like chipped paint, a cracked window, an outdoor lamp fixture that’s busted, or a light that doesn’t work all of that can be taken care of very quickly. Those are far from deal killers.
That’s why a quality home inspection is so important. It’s going to tell you if a loose board is the result of a termite infestation or if it just needs a new nail.
Police Mortgage specializes in conventional mortgages, purchase money transactions, FHA loans, and VA loans. Led by founder and CEO John Aretos, Police Mortgage is known and respected for providing clients with exceptional service, customized terms, quick and easy closings, and low money down options. To learn more about Police Mortgage, call 312-499-8878.
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