A home inspection for mortgage lenders focuses on items that have a history of failure with the potential to be costly to repair. The failure data is compiled and shared among insurance providers so they can protect themselves from costly claims. Insurers can require you to repair, replace, exclude an issue from the policy or even refuse to insure a property.
When purchasing a property, it is not unusual for the mortgage lender to conduct their own home inspection, even if the buyer has already had a home inspection done by a professional firm. In some cases they also will charge the applicant for the inspection. Here are some of the most common issues for the lender.
- How old is the water tank? Typical life expectancy is 8-12 years. If it’s older, have it replaced.
- Are the hot and cold water hoses connected to the washing machine, rubber or flexible stainless steel (SS). Rubber hoses are notorious for bursting and creating massive water damage. Use only the flexible SS type.
- Do you have any exposed expanded foam insulation in the basement? This type of insulation can smoke and burn. If it is exposed, cover it with drywall and tape the joints, which makes the wall fire rated.
- Is there polybutalene (Poly-B) water piping in the house? Poly-B has been the subject of lawsuits in the USA but not so much in Canada. If the joints and compression fittings are plastic, then there may be an issue. The issurance company will want a licensed Plumbing Contractor to do an evaluation of its condition and give an opinion if any corrective action is required.
Time and money can be saved if you have answers for these common issues that a mortgage lender will want to know about.