Many home buyers get a home inspection prior to purchasing a new home in NC. We think that’s a great idea, but recently, we’ve run into some last minute problems that you should be aware of! ESPECIALLY if you are applying for a USDA Home Loan in NC!
Home Inspection Reports Causing Headaches at Closing
First – understand that the USDA Home Loan Process could mean that your loan is going to be underwritten four times. Each time an underwriter looks at the file, there’s the chance they are going to ask for another condition. 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 Underwriter, knows that there is a home inspection, they want to see it and they want all issues on the report fixed. Even simple stuff. SO let’s say the Home Inspector said there was some kick boards near the back door that are worn – the Underwriter could ask that this be fixed prior to closing, even if it’s normal wear and tear.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.
Property Qualifying: USDA Loans requirements say that the home you are buying must be a single family residence. No Duplexes, or tri-plexes. It must also be your primary residence. SOME Condominiums and town homes qualify for USDA Loans, but mobile homes do not. We talked to a couple in Mt. Airy who wanted to use USDA Home Loan financing on a Condo, the problem was that the units were not FHA approved. Now I realize USDA and FHA are not the same entity – but a condo project has to meet the FHA standards to qualify for a USDA Home Loan.
This is a great example of Lender Specific Guidelines. Each lender has their own requirements… and sometimes those requirements 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.