When you buy a home with financing, you have to abide by the loan program’s rules. Not all of those rules apply to the borrower, though. Many rules pertain to the property itself. It makes sense since the property is the collateral the lender holds onto in case you foreclose on the property.
But just what do conventional loans require? Do you need heating? Could a home without a proper heating source stop you from getting financing?
A licensed appraiser will inspect the property you wish to buy after you sign a purchase contract. The lender sends the appraiser out to look at the home’s interior and exterior to determine its fair market value as well as its condition. Even if a home is worth enough, the lender is still at risk if the home has safety or health hazards.
Any deficiencies the appraiser may find cannot affect any of the following:
- The home’s safety
- The home’s soundness
- The home’s structural integrity
An appraiser will inspect the property and look for deficiencies that fall into these categories. If there are issues within any of the categories, the appraiser will make the property ‘subject to’ the impending repairs. This will make the home ineligible for conventional financing for the time being until the repairs are done.
Is Broken Heating an Issue?
Among the home’s safety and soundness fall the home’s utilities, including the heating source. If the heating doesn’t work or if all rooms aren’t properly heated, you may not be able to secure conventional financing. In fact, you probably can’t secure any type of financing since heating is a crucial component of a home.
Appraisers make the appraisal report on an ‘as is’ basis, which means they report on the home’s condition as it is when they view it. Now, if the seller is planning to fix the heating source, you can hold off on the appraisal until after it’s fixed. You can also pay for an appraisal update to fix the issue, allowing the appraisal to go through.
Other Issues that Could Hurt an Appraisal
Aside from the heating system, other issues with a home could stop your loan approval in its tracks including:
- Roofing issues (leaks, not enough life left on the roof)
- Broken windows
- Broken doors
- Missing handrails
- Electrical system issues
- Plumbing issues
- Foundation cracks
- Major safety issues
- Lead paint
Any issues the appraiser finds that affects the home’s livability, as well as its safety, could be cause for concern. While conventional loans have more flexible guidelines than any other loan program, they still want a home that is safe, sound, and secure.
One way to tell what a home needs before you get too far into the process is getting a home inspection. While it’s an extra charge on top of the appraisal and other closing costs, it lets you know what is wrong with the home much earlier in the process. Your attorney may even suggest that you put an inspection contingency on the contract, giving you time to have the inspection completed as well as having time to review it to know what issues the home has, including heating issues.
While heating issues may not stop you from buying a home, it could put a halt on your mortgage financing. Make sure you know the true condition of a home before getting too far into the process so that you know what you may need to ask for as part of the negotiations in order to get your conventional loan approved.