The type of home loan you apply for may determine whether your lender requires an inspection before granting an approval. As described by The Mortgage Reports, conventional loans may not require inspections because the U.S. government does not guarantee them.
Conventional mortgages, however, must follow Freddie Mac’s and Fannie Mae’s standards. These two agencies purchase home loans from the banks that issued them. If you apply for a loan from a lender that may sell it, an approval may depend on the property’s appraisal value. The home could also require a professional inspection.
Appraisals may affect purchases
Hazards and unsafe conditions may affect a property’s true value, which a professional appraisal may provide. A home inspection may reveal defects that could lower a property’s appraised worth. Inspectors, for example, may search for environmental threats such as underground storage units containing oil that affect a home’s value during an appraisal.
Older homes with issues concerning septic tanks or asbestos may have less worth than newer homes built with modern features. If a lender believes that a property has the potential to fall below its appraised value, it may not approve a mortgage. You may need to search for another home or use an inspection report to lower its selling price.
Government-backed home loans could require property inspections
Mortgages backed by government agencies such as the Federal Housing Administration typically require both home inspections and appraisals. As noted by SmartAsset.com, homes under consideration must pass inspections and have appraisals reflecting the true value of their purchase price. FHA inspectors, for example, may review location and structure to determine a property’s market worth.
The home that you hope to buy may need to pass an inspection and have a pre-purchase appraisal. Your lender could require you to demonstrate that the property has sufficient market value to meet the loan approval criteria.