When you apply for a mortgage, lenders assess two things: your risk as a borrower and any risks associated with the property. While you can influence the former through having a good credit score and low debt-to-income ratio, the latter requires a careful eye when shopping for your home.
Want to keep your financing opportunities open before you buy? Watching out for these potential risks during your home search can help.
Why are property risks important to look for?
Certain home features are financially risky, and too much risk makes it harder to get approved for financing. This is true for conventional mortgages and even more so for FHA loans, which tend to have more rigid property requirements.
Here are four concerns that can cause setbacks, even for conventional financing:
An Old Roof: Roofing must have at least two years of functionality remaining to qualify for most mortgages. If the roof is too old, it’s worth asking the seller if they will update it.
Structural Issues: Homes need to be structurally sound to qualify for a conventional mortgage. Structural issues can often be hard to spot, so a third-party home inspector can help you identify any potential concerns.
Mold or Excessive Water Damage: Both are safety issues that can set your financing back. They’se are considered “adverse conditions” and will be noted on the appraisal.
Uninsurability: If a home cannot be insured due to its vulnerability to wildfires, flooding or other environmental hazards, it will likely pose problems with financing as well.
Interested in a home but not sure if it will qualify? Get in touch — together, we can find financing options that suit your needs.
