Finding The Perfect House

What To Do If The Mortgage Company Denies A Loan Because Of A Bad Roof

After waiting years to clean up your credit so your credit rating is good enough to qualify for a mortgage, you may be startled to hear that your mortgage lender denies a loan based on the condition of the roof of the house you want to buy. Here's what you need to know if this happens to you.

Condition of the Roof

The roof is the main protector of the house against weather elements. If the roof is in bad shape, the structural integrity of the entire house can be compromised by water infiltration. Water damage can lead to mold growth and it can also cause shorted electrical wires, which can pose a fire hazard. A leaky roof can also cause the insulation to be inefficient, which can lead to higher utility costs. Because of all the things that can go wrong with a bad roof, mortgage companies can deny loans.

Availability of Funds for Repairs

When you apply for a mortgage, the mortgage lender is aware of your ability to get financing to make repairs on the house you want to buy. A mortgage approval could prevent you from securing loans in the future for repairs. Many lenders will be unable to offer you loans if they feel that you are unable to repay them due to having too much on your plate already. For this reason, a mortgage company will deny a loan if they feel that you will be unable to pay for future repairs.

Negotiate with the Seller

You may be able to negotiate with the seller. Perhaps the seller will agree to repair the roof before closing. Alternatively, the seller could reduce the price of the house so you will be able to make the repairs yourself after closing. To do this, you would need to hire a roofing contractor before closing with a stipulation in the contract that the roofing contractor will make the repairs after you buy the roof.

Of course, this will need to be approved by the mortgage company prior to closing on real estate. Speak with your realtor for more information about how to get a roof repair stipulated in the contract. Also, it's important to note that you may have trouble finding a homeowner's insurance company that will insure a home that has a failing roof. However, they may be willing to insure the home if you show proof of the roofing repairs that will be made.