Home Inspection Reports Causing Headaches at Closing

By
Mortgage and Lending with Equity Resources NMLS 67179 Licensed in NC

Home Inspection ReportsMany home buyers get a home inspection prior to purchasing. We think that’s a great idea, but recently, we’ve run into some last minute problems that you should be aware of!

We first saw this problem last fall with USDA Home Loan Financing... now we are seeing it across the board!

Here's the problem... if the investor, Chase for example, knows that there is a home inspection, they want to see it and they want all issues on the report fixed. Even simple stuff.

We are sometimes advising clients to avoid putting the home inspection on the HUD. Granted, this is a PROBLEM, because it means that if the borrower was going to pay for the inspection at closing or the seller was reimbursing the buyer at closing the buyer has to absorb the cost outside of closing.

But that could be a better scenario than having to do a bunch of insignificant repairs that the investor discovers the day of closing. Or worse - repairs that the buyer was going to do himself after the fact. 

This is a great example of Lender Specific Guidelines.  Each lender has their own requirements... and sometimes those requiremetns are Geo-Specific.  But since we are seeing an INCREASING NUMBER of times where the Lender is asking for the Inspection Report and to see that all repairs are done... I think it's something you should be talking to your lender about.

If you have questions about USDA Home Loans, and purchasing a home in NC – please call Steve and Eleanor Thorne, USDA Home Loan Experts in NC 919-649-5058  Originally posted at NCFHAExpert

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Rainer
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Greg Bryant
RE/MAX Central Realty - Asheboro, NC

Underwriters are so afraid of everything nowadays that it seems that they make up things to ask about.

Feb 18, 2011 02:26 AM #1
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Eleanor Thorne
Equity Resources - Cary, NC
Equity Resources 919-649-5058

Yeah - well there's nothing like telling a buyer and a seller that closing will be delayed because I need evidence that cracks in a tub have been fixed... 8o(

Feb 18, 2011 02:37 AM #2
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Lee & Pamela St. Peter
Berkshire Hathaway HomeServices YSU Realty: (919) 645-2522 - Raleigh, NC
Making Connections to Success in Real Estate

As always great advice Eleanor!  I think that the new due diligence contract will help alleviate this scenario. 
The buyer could always negotiate seller paid closing costs couldn't they?  Thanks for the heads up!
Pamela

Feb 18, 2011 02:43 AM #3
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Eleanor Thorne
Equity Resources - Cary, NC
Equity Resources 919-649-5058

Pam - yes - the seller can pay the closing costs.. but if the Home Inspection is being paid on the HUD, most of our Lenders are asking for a copy of the report WITH ALL repairs being made.

Feb 18, 2011 03:03 AM #4
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Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

Eleanor,

An agent called me today and asked "Is there anything that you would rather I didn't put on the BINSR, seeing that this is a VA loan?"  I was floored.

Mike in Tucson

Feb 18, 2011 02:45 PM #5
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Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT
Broker-Mentor,CRS

Eleanor, I believe that the home inspection is no longer a closing cost allowable credit.  That was removed when the new regs came about.  I know that the home inspector's here in my market, were very upset about it.  The banks must be concerned about future liability.

Feb 22, 2011 11:29 PM #6
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Eleanor Thorne

Equity Resources 919-649-5058
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