The 2.3% compound growth rate of the foundation repair service market over the past ten years is proof that foundation repair services are in high demand. One way such a service will come in handy is when you encounter a home with foundation issues.
House hunting is quite a daunting process whether you are financing it with a loan or your finances. It can get more challenging if the home inspection report identifies signs of foundation issues. These signs include exterior cracks, bouncing floors, and misaligned doors.
A home’s foundation is meant to support foot traffic and structural weight. So, if the property you intend to buy has foundation problems, here’s how to act.
Alert Your Lender About the Problem
Contact your lender once you learn about the foundation problems on the home. Depending on your lender, you may qualify for a loan that caters to the purchase and repairs.
Since private lenders pay less attention to a property’s livability, they are less likely to lend you money to repair the problem. They will also ask you for proof of the repair before closing the loan.
Government-backed mortgage programs like USDA, VA, and FHA loans have strict structural requirements. In this case, you may only get the loan once the property meets the structural soundness these programs require.
Consider a Rehabilitation Loan
A rehabilitation loan is a great alternative to conventional home loans if you buy a home with structural issues. Your options for this home financing solution include VA renovation loans, USDA rehabilitation loans, and FHA 203K rehabilitation loans.
VA renovation loans are available to qualifying service members, while USDA rehabilitation loans are suitable for homes in USDA-approved districts. You may take a 203K rehabilitation loan to cater for repairs that can improve the home’s livability.
Agree to an Escrow Holdback
Minor foundation issues in the home may prompt your mortgage lender to permit an escrow holdback. With this agreement, the closing process will take place as planned. But the lender retains part of the seller’s sale proceeds to cater for the repair costs.
If you choose to pay for the repair costs, you will have to put the finances into escrow. Showing proof of the repair work will help you get compensation.
The escrow holdback will detail the work, estimated costs, completion deadline, and payment schedules. You must sign this agreement with the seller before submitting it to a lender.
And if the lender approves it, they will open an escrow account. While there are exceptions for paying for and making repairs, the seller pays for them. The agreement requires them to put money into the account for the repairs.
Negotiate a Discount
You can negotiate a lower price with the seller if you have the structural engineer’s or home inspection report. If the report reveals foundation issues, the seller has to disclose them in the sale negotiations. Negotiating a lower price is a good idea when the seller won’t make the repairs.
The seller can offer the home on an “as-is” basis if they won’t or can’t repair it. In this case, anyone buying the property will know that only some elements are in proper working condition. The new buyer will cover the repair costs.
Know When to Walk Away
As heartbreaking as it may seem, at times, walking away is the only choice you have if you encounter a home with foundation issues. Going in this direction will make sense if the seller refuses to make repairs and you don’t have time to wait for the repair to end.
Knowing to walk away from a deal is essential for every homebuyer. It’s because some homes may not live up to your expectations. The sooner you exit, the higher the chances of spending less time looking for your dream home.
You can have your hard-earned cash refunded after backing away from the sale. But this will only work if the sales contract features an appraisal or home inspection contingency. Evidence of previous undisclosed repairs can also help you get your deposit back.
Schedule a Foundation Repair Service Today
Foundation problems don’t have to take the fun out of your home-buying experience. Get them solved to ensure the closing process is on time.
You can count on Pinnacle Foundation Repair for expert foundation repair services. Experts from the company will do a free foundation examination and follow-up inspection of the home. If you have any questions, feel free to get in touch.