If Your Appraisal Comes Back With These 5 Issues, Your Mortgage Loan May Fall Apart

When you are buying a house, you will need to get an appraisal. A home appraiser doesn't just look at what the home's market value is, although that is their main job. They're also checking out the property to see if there are any obvious health and safety issues.

If the appraiser spots certain problems affecting the health and livability of the house, they have to note this on the report that they send to the lender. Unfortunately, a mortgage lender may decide that they are unwilling to give you a loan unless these issues are corrected prior to closing. When that's not possible, your deal could fall apart.

Here are some of those health and safety issues that could make getting a loan a no-go.

1. Exposed wiring

If there is a problem with the home's wiring, it creates a risk of the home burning down -- or of someone being electrocuted on the property. Mortgage lenders aren't in the business of helping people buy houses that could be death traps or that could burst into flames at any moment. There's too big of a risk that the property could be destroyed or that it would be unsellable if the lender had to foreclose on it.

If you're considering buying a house that has exposed wiring, you'll need to make sure the seller is willing to get an electrician in to fix the issue properly prior to an appraisal. That just makes good sense, as you also shouldn't want to buy a home that presents such a big safety risk.

2. Broken windows

Broken windows can also make a house unsellable. And they could mean there are other problems resulting from the exposure to the weather that resulted from the broken window. Because of that, windows will typically need to be fixed or replaced prior to a mortgage lender providing a home loan.

3. Insufficient smoke or CO detectors

A home typically must have one smoke detector in each bedroom, one detector on each level of the home, and one detector in the hallways outside of bedrooms. A carbon monoxide (CO) detector also must be installed on each level of the property, as well as in hallways outside of bedrooms.

If a home is missing those detectors, lenders may find it presents a health and safety risk and isn't mortgageable.

4. Active roof leaks

When a roof has less than two years of active life left, this is a major red flag. Typically, repair or re-roofing will be necessary before the lender will offer a loan. That's the case both because a roof can be really expensive and because a leaking roof could cause other problems in the home that are expensive to fix (like damage to the rafters).

Lenders will usually require a roof inspection if there are any questions about the roof's durability -- such as water stains from an active leak.

5. Non-working appliances or heaters

For home buyers getting FHA loans, there are additional health and safety issues that could derail a loan. This includes appliances that don't work, a heater that cannot heat the house to at least 58 degrees, or appliances that are missing.

All of these issues make lenders nervous that the home will not be good collateral. If they come up on your appraisal, you'll need to negotiate with the seller to make fixes. If that's not possible, your lender may not approve you to buy the house and you could find yourself starting from square one.

It's best to be on the lookout for these problems when you're house hunting. You don't want to get through the offer phase and pay for an appraisal, only to find out a home's condition means you can't get the mortgage loan you need to buy it in the end.