A conventional home loan is a great way to shore up your finances and use the money for productive purposes. It is also easy to obtain and requires minimal legal hassles. In this blog, we explore the dynamics of a conventional home loan and understand its relationship with home inspection. Read on to know whether you need a home inspection before applying for a conventional loan.
What Exactly Is A Conventional Home Loan?
A conventional home loan is an ordinary mortgage not backed by federal government insurance or any guarantee. They are non-government loans funded by private organizations like banks or credit unions. Generally, these loans are based on loan standards provided by two companies, Fannie Mae and Freddie Mac, which act as government-sponsored corporations to buy and sell mortgages.
Key Characteristics Of Conventional Home Loans
Following are some of the main features of conventional home loans.
- The interest rates may either be fixed or adjustable.
- This may be applied to quite a number of property types, including the standard single and multiple-unit dwellings and condos.
- Usually, they require a higher credit score and down payment than government-insured loans.
- Carries stringent conditions for the property’s condition.
Is A Home Inspection Required For A Conventional Loan?
The simple answer to this question is no. A standard home loan does not require a home inspection. The loan approval depends not on the house’s condition but on your credit score, income, and the down payment you are willing to make.
However, that does not mean you should not opt for a home inspection. It is advisable to use the services of a home inspector to avoid putting a damper on the investment.
Conventional Loans and Home Inspections
Even though home inspections are not mandatory, most traditional home financing institutions recommend home inspections. Here’s why:
Risk Assessment
Lenders use inspection reports to evaluate the risk level related to a specific property. A home with underlying problems may be vulnerable to a larger threat, which can thus influence the loan or interest rates.
Appraisal Support
The inspection report might be used alongside home appraisal results to gain important facts about the property and its market price. Furthermore, the lender can use them to expedite the loan process.
Specific Circumstances
There are some circumstances in which a lender would demand a home inspection. This may include government-backed loans (FHA/VA loans) and loans against older homes or those homes that underwent major structural changes or are situated near water.
What Is Included In A Home Inspection & Why It Is Important?
Home inspection involves a professional inspector’s assessment of a property. The home inspector gives a detailed analysis of the house’s physical condition and determines its livability. It usually includes the following:
Structural Integrity
The inspector looks for foundation issues, damaged roofs, cracked walls, and other signs of structural instability. They will assess the home from every angle that you may not be able to do yourself.
Electrical Systems
Our houses are laced with electric networks. Checking conduits, wiring, and electrical panels for hazards is usually covered in the inspection. If your house is technologically advanced with smart home systems, then that is also covered during the home inspection process.
Plumbing Systems
Checking plumbing, sewerage, and drainage systems also constitutes a major part of the home inspector’s job. It usually includes checking pipes, drains, water heaters, and the sewer line for leaks and blockages.
Heating and Cooling Systems
The inspector will check the functionality and performance of heating, ventilating, and air conditioning (HVAC) equipment. It is important that they be in good working order to avoid any untoward situation in the future.
Attic and Crawl Space
Usually, buyers ignore these areas, but a vigilant home inspector will not let it go. They check the insulation’s condition, the ventilation provision, and any signs of pest or moisture damage.
Interior Components
The inspector will visually document any signs of deterioration in the walls, floors, ceilings, and any surface of windows and doors. Whatever they find during the inspection, they record it in the home inspection report as pictorial evidence is the best way to highlight and record an issue.
How Does Home Inspection Benefit the Buyers?
To the buyers, the home inspection is a handy weapon. As a buyer, you can benefit from these inspections in the following ways:
Uncover Hidden Defects
Most issues cannot easily be recognized by an ordinary person without proper knowledge of what to look for. A thorough inspection can reveal hidden issues like pest infestations, mold growth, leaky roofs, and faulty wiring.
Negotiate Repairs Or A Lower Purchase Price
By having the inspection report in hand, you, as a buyer, are well prepared to bargain with the seller. You can ask the seller to repair the identified issues before you close the deal. You can also use the repairs as a bargaining tool to get a better buying price or negotiate repairs.
Gain Valuable Insights
The inspection report means that the person receives a vast amount of information about the home – helping you plan future maintenance. Based on the information in the report, you can set aside the amount of repairs you will carry out in the future.
Should You Hire A Professional Home Inspection Company?
Of course, hiring a professional, licensed home inspection company is always better when buying a house. You can get the assistance of a licensed inspector who will understand what to look at and how to uncover hidden issues.
Engaging the right inspection service gives a professional and impartial view of the property. This eventually lets you save your time, energy and money by hiring an expert who will provide you with an impartial and critical review of the property so you can make a nuanced and informed decision.
Conclusion
Generally, a conventional home loan does not warrant that you get a home inspection. However, it is one of the saner options you should consider as a homebuyer. A home inspection can guarantee that you are aware of all defects present in the home and reduce surprises related to home repairs.
So, it’s better not to skip this crucial step. Contacting a professional home inspector is the best way to schedule a home inspection today and ensure that the home you plan to move into shortly is safe and secure and offers you comfort.
Do you need a comprehensively competent, qualified, and efficient inspection company?
Elite Inspections is your best choice. We are a well-reputed home inspection company that guarantees professional, efficient, and complete inspections to help you feel confident about your home-buying decisions.
Our team of certified inspectors will provide you with a detailed report on home defects you intend to buy and offer you guidance throughout the process.