All About Home Inspections

New house or old house, a home inspection can spare you from headaches when you discover later that some problems could have been repaired prior to purchase. These problems and their solution would constitute a “conditional sale” -- meaning that you would only buy the house if and when these problems were repaired.

Home Appraisal vs. Home Inspection

A home appraisal is an estimate of a property’s value. This estimate is required for purposes of approving the mortgage or the mortgage insurance. An appraisal doesn’t look for defects or assess the possibility of potentia l problems. A home appraisal, therefore, does not evaluate the physical condition of the house. An appraiser is not a house inspector, although he or she will visually observe the condition of the house, its amenities, and the surrounding areas in order to deermine a marketable value.

A home inspection, on the other hand, inspects the following:

• heating and air conditioning systems
• electrical systems
• foundation
• structure
• plumbing
• floors
• attic
• overall structure
The purpose of a home inspection, therefore, is to find out what repairs are required as a result of structural deficiencies or as a result of normal wear and tear.

How a Home Inspection Affects the Mortgage

If you’re buying an old house that was built, say, 25 years ago when environmental standards were not yet in full force, the lender might have questions as to the real value of the house and may withhold approval of the mortgage until an inspection is carried out. If the cost of the house is $225,000 and after inspection there are major deficiencies discovered, these deficiencies may affect the amount of the mortgage. Your lender could say that the house isn’t worth $225,000 so why are you applying for a $225,000 mortgage? What if the inspection reveals that the house is only worth $100,000 because it needs substantial repairs? Also, your mortgage insurance application may be denied if it’s deemed that the house is unsafe.

Home Inspection: Things to Remember

Depending on the size of the house and the complexity of its structural elements, the average time it takes to complete an inspection is about 2-3 hours. Some professional inspectors actually offer two types of inspection: a standard one and a more comprehensive one. Whether it’s standard or comprehensive, an inspection report must be submitted by the inspection company.

Some inspectors also strongly encourage clients to accompany them during the inspection. If you’re invited to come along, take advantage of it. This will give you a chance to ask as many questions, while you and the inspector go from room to room. The homeowner also gets the opportunity to explain what repairs were carried and what materials were used.

A home inspection, at the minimum, must include these items:

• A complete visual inspection of structural components (both inside and out, and from the basement to roof)
• An evaluation of all major systems.
• An assessment of the home’s “health”
• A written report that describes the inspection: what was inspected, how the inspection was carried out and the findings.
• Photographs and recommendations

Choosing a Home Inspector

The person or company you select to inspect your home must be certified and licensed. Your lender may ask proof of an inspector’s credentials. They must have sufficient years’ of experience in house inspections (don’t select an inspector who is experienced only with commercial buildings) and must carry some type of insurance or bond.

Average cost of a home inspection ranges from $200 - $500. You should avoid inspectors that immediately recommend a contractor to make the repairs.

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ABOUT THE AUTHOR:

Zack Ashan -- a.k.a. "The Mortgage Guru" -- is a licensed Mortgage Broker based in the Greater Toronto Area. Zack's personal mission is to help as many people as possible WIN the mortgage game, by providing them with clear, honest and valuable advice. Learn more about Zack and pick up his groundbreaking book "The Insider's Guide to WINNING the Mortgage Game" at http://www.mortgage-guru.ca.