So what happens if you are in contract to close on a house? The story is still unfolding, but here is what at least is known so far: “If you’re in contract with a commitment letter that took place prior to the storm, the house has to be reinspected,” says Gregory Frank, manager of Guaranteed Rate, a Garden City mortgage company.
Most lenders want exterior photos. If there is evidence of damage, they may require interior pictures as well. “We have done about 500 inspections so far. ... With the exception of waterfront areas such as Long Beach, the vast majority are OK,” Frank adds.
Generally, lenders pay for the reinspections.
Under most circumstances, the house has to be in a financeable living condition when it closes, adds Michael McHugh, president and chief executive of Continental Home Loans in Melville. “If clients have power, an inspector is sent right away,” McHugh says, noting, “The security of a house is very important.”
If a house is damaged, the homeowner will have to cure it, Frank says. Some buyers are spooked, though. Seth Levy of Shawn Elliott Luxury Homes & Estates says that some buyers are trying to walk away from deals because they are “scared,” which is not a legitimate reason to break a contract.
As for having a property reappraised — it’s lender specific, says Frank, adding, “Every investor is different. There is no standardized guideline.”
One topic housing experts stress: Don’t let the storm ruin your credit, Frank says. If you suffered damage, continue to pay the mortgage. The first step is to call your lender to let them know what is going on, McHugh says, noting relief might be on the way.
While it may be difficult to make payments, you might need to refinance down the road, says McHugh, adding, “It’s a double-edged sword.”