Foundation Inspection Certification: The What, When and Why’s of a Foundation Inspection Certification

Foundation Inspection Certifications: A Brief Introduction

In the process of obtaining a mortgage, your lender may request a Foundation Inspection or a Foundation Certification. For this article, we will be calling it a Foundation inspection Certification. A Foundation Inspection Certification may be requested for several reasons, such as being requested by the appraiser due to his or her inspection, or the home being manufactured and needing to be certified for HUD/FHA purchasing.

Foundation Inspection Certifications For Appraisals

Foundation Inspection Certifications are documents that certify that a foundation of a home meets local and HUD/FHA guidelines. This can mean several things. If an appraiser requests a Foundation Inspection Certificate, this is usually due to the spotting of a crack or damage in the foundation of a home during their inspection. The appraiser can also request a Foundation Inspection Certification when there’s evidence of moisture or mold in the basement or in the crawl space, as this can be evidence that the foundation is not properly sealed, or there are cracks that were otherwise unable to be detected by a quick inspection of the basement or crawl space. Remember that an appraiser will not do a full home inspection. This means that a full in-depth inspection of the basement or crawl space may not be done by the appraiser. This Foundation Inspection Certification will be necessary to ultimately clear the Appraisal Report for the lender, so that the appraiser is satisfied that the home is on a solid foundation without any indication of failure and/or need of repair. 

If buying a manufactured home, your lender may require a Foundation Inspection Certification.

Foundation Inspection Certifications For Manufactured Homes

The Foundation Inspection Certification in regards to HUD/FHA purchasing of a manufactured home may be obtained for a different reason. The foundation certification report for a manufactured home are required in certain counties across the country, but not all. In most cases, the Foundation Inspection Certification may be needed to verify that the foundation is currently present, is fixed or permanent, and is functional.  An example of a permanent foundation is one that is constructed of durable materials, such as concrete, or specifically treated wood, and that the foundation is site built. The manufactured home, according to the HUD/FHA Guidelines, must have attachment points to anchor and stabilize the manufactured home to transfer all loads to underlying soil or rock. In other words, the lender will need to verify that the home will not be unstable during inclement weather, like high winds, or become unaffixed from the soil through normal and abnormal conditions in conformance of local guidelines. The Foundation Inspection Certification must be performed by a professional certified foundation engineer or architect.

What Needs To Be On The Foundation Inspection Certification?

The Foundation Inspection Certification will ultimately clear up any concern from a home inspector or an appraiser, and will also clear the required condition by the lender for manufactured homes, if it is required in that specific county. The Foundation Inspection Certification will need to also have the certified and licensed engineer’s signature and seal if a seal is required by the state. If the state issues seals with the engineer’s license, then a seal is also required on the completed Foundation Inspection Certification.

This is an example of a kitchen in a manufactured home

What Will It Cost?

A Foundation Inspection Certification may cost anywhere between $350 to $450 depending on location. This cost may be covered by the seller or the buyer, depending on the Purchase Contract. We hope this blog post will help a buyer interested in buying a manufactured home or a seller wishing to sell a manufactured home by preparing them for additional costs.

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First Time Home Buyer Guide: What You Can Expect: Home Ready Loans Part 5

The Home Ready Loan Process: After Submission

In the last blog post, we spoke about the Uniform Residential Loan Application, or the 1003 Form. In this final post, we will be talking about what happens after the initial submission for the first time home buyer in the Home Ready Loan Program. This post will be very similar to the FHA post for this same topic, as the process is identical.

After the first time borrower,  along with the Loan Officer, submits the application with all of the required documentation to the lender, the underwriter will review all of the documents. Unless there is a statement of denial right then and there, the lender will reply with what is called a Conditional Approval. This approval outlines all additional documents required by the Loan Officer or Loan Processor, First time borrower, Seller’s and Buyer’s Agents, and Title companies associated with the transaction.

The first time borrower has to remember that pay-stubs expire after thirty days, and Bank Statements after forty five days.

Documents Required For The Conditional Approval: Borrower and Third Party Documents

Most documents required by the first time borrower at this stage may be any additional pay stubs and bank statements that have since expired. The first time borrower has to remember that pay-stubs expire after thirty days, and Bank Statements after forty five days. Also, if the first time borrower still does not have the needed funds for closing, the underwriter will ask for an updated Bank Statement to show those funds being available. Any funds added to a first time home buyer’s bank account that is not labeled on their statements as payroll will need to be sourced if this is the case. 

The title company will be responsible for sending in accurate title documents. These title documents include a Pre Closing Disclosure, Wiring Instruction, tax Certificate, Title Commitment, Errors and Omissions Insurance, Chain of Title and a Closing Protection Letter. The Pre Closing Disclosure outlines all of the costs of a loan is similar to a Master Statement that is received when a loan closes.  The Wiring Instructions are just instructions for sending money to the title company to pay for title documents. The Title Commitment includes the lender and first time purchaser, outlines any policies that are covered, like an owner’s policy and lender’s policy, and the coverages and exemptions that are covered under each. Additionally, the chain of title may be on the Title Commitment as well. The chain of title shows the the previous deeds transfers, up to a twenty four month period. The Title Commitment may also, in their title search, find judgments for either the seller and buyer. Sometimes, a title company will not go through with a loan until these judgments are addressed and satisfied. The Closing Protection Letter is a letter that forms an insurance contract between the title company and the lender. This contract will basically compensate the lender for any misconduct carried out by a closing agent, and will not hold the lender accountable for damages.

 

The Loan Processor and first time home buyer will be responsible for procuring homeowner’s insurance for this first home.

Responsibilites: Borrower and Third Party Responsibilities

The seller’s and buyer’s agents will be responsible for any purchase contract extensions as well as any inconsistencies that may arise from the submitted purchase contract. For example, if there are any addendums, the underwriter will need these to be signed and dated by all parties to insure that the transaction is legally bound. 

The Loan Processor and first time home buyer will be responsible for procuring homeowner’s insurance for this first home. Buying a home for the first time can cause stress when it comes to searching for homeowner’s insurance, but a good Loan Officer will provide the first time home buyer with a specific number to keep the yearly premium under. The homeowner’s insurance has to be within the required debt-to-income ratio so that it will be affordable. 

Hopefully, this series of blog posts has helped a borrower with their first mortgage using the Home Ready Loan Program. Our aim was to hopefully prepare a first time buyer with their first home, and not be intimidated by the process.

This is the final section for this series for the time being, but we may be adding the Home Path in the not-so-far future. We will start off with the very in-depth post about Home Path, along with the pros and cons of going with that loan program.

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First Time Home Buyer Guide: What You Can Expect: Home Ready Loans Part 4

The Uniform Residential Loan Application

In the last section we briefly spoke about the Appraisal Report and additional documents that may be needed by the first time home buyer to receive a clear to close. This section will be about the documents needed for the general application for the Home Ready Loan submission process. Just a note, that this section will be very similar to the USDA, FHA, and Conventional Loan posts about this Uniform Residential Loan Application.

The general application for a loan is called the Uniform Residential Loan Application, or the 1003. First time home buyers will hear more mortgage-savvy individuals will refer to this as the “Ten-Oh-Three” form. This form is the form that the first time home buyer will submit along with all of their income, assets and legal documentation to a lender. This information needs to be filled out as completely as possibly by the first time home buyer. The first time home buyer will be assisted by the loan officer when filling this form out for their first home loan.

Be advised, it’s always best to be as honest and forthcoming as you can on the 1003 Form.

1003 Form: Honesty Is Your Best Policy

The first time home buyer’s responsibility is disclosing all of the information for the Loan Officer on this form, and being as accurate as possible. The purchase contract will be there to provide the information in regards to the loan type, amortization period, and the property information. The property information basically indicates what kind of property this will be, whether it’s a regular loan, new build, or refinance. Each section has specific information that will be need to be filled out together with the first time home buyer’s loan officer.

The Loan Officer will help the first time borrower fill this form out by going over all of the applicable sections.

Additional Sections on the 1003 Form

The next couple sections of the Uniform Residential Loan Application have to deal with borrower information. This information is absolutely crucial and will need to be as accurate as possible. This will be personal information such as date of birth, social security number, and current address. This will also include if there’s a co-borrower on the loan as well. The first time home buyer will also input their work information, including employer and work history. For Home Ready Loan guidelines, the underwriter will need the last 2 years of employment, so if there are multiple employers this section has a place for this additional information. The underwriter will require a verification of employment from all of a first time home buyer’s  employers within the last two years of employment.

The next section will be detailing assets and liabilities. This section will be asking about all of your bank accounts, IRAs and/or 401Ks or any other retirement accounts. The first time home buyer will also notice there’s a “liabilities” section. This section will also be requiring any current bills and monthly payments, such as a personal or car loan. These must all be documented so the loan officer and the underwriter can get an accurate representation of a first time borrower’s debt-to-income ratio, as well as assets that are available for the loan. For any legal related debts, such as child support or spousal support, there is also a section for this information to be added. The loan officer and underwriter will be looking for proof of all of these documents as well.

The other sections are for demographic information and disclosures and instructions about the document itself. The information added here should be as accurate as possible as well.

For the next section, we will be talking about the Conditional Approval and Closing.

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