Crack In Garage Foundation In A Conventional Refinance

[Pat314]

I'd appreciate some perspective on an appraisal for a refinance. My husband and I applied on Friday for a conventional cash out refinance from a credit union and don't have an appraisal inspection date yet.

We discovered yesterday that the back of our attached garage has a crack in the concrete foundation. There's no evidence of moisture inside the garage, but the crack is fairly large... I think about 2 feet high above ground and we don't know if it goes below ground level.

My husband thinks the crack is where the garage and house foundations meet, and said it looks like it had been filled in before. The house was built in 1984 and we've been here since '88, so if it was patched with extra concrete we assume it was done by the builder.

Is this likely to be noted by the appraiser and is it also likely to be a significant issue with the credit union? If it's considered serious, is it possible the credit union would let us fix it after closing with some of the cash out funds or is it more likely we'd have to have it fixed before the loan would be approved? The loan application states that the loan is for home improvements in addition to paying off an existing mortgage and equity line.

Also, we noticed some small areas where the paint is chipping off the wood siding and there are areas where there's green algae on the siding. We're in Massachusetts and most days the weather's still been fairly cold so we haven't been doing outdoors things yet. Will the paint chipping or the algae possibly be considered issues by the lender?

Based on our town's assessed value, which lenders around here think is low, we're only applying for about 45% LTV. So I assume a lowered appraised value probably wouldn't cause a problem getting the loan, but I'm concerned about what we may have to fix before the loan could be approved and how much it might delay things. Thanks in advance for any info or advice...

Pat

 

[hastalavista]

For clarification....

The visible crack starts at the concrete pad and then runs up along the exterior wall (what is the wall material)? And, it is where the garage is attached to the house; is that correct?

If that is correct, how "wide/deep" is the crack? Hairline or a little more? Big enough to stick a pencil in?


If it is obvious, then the appraiser is going to note it. Depending on the situation, here are some of the more likely possibilities:
A. The appraiser notes it in the report but does not consider it significant.
B. The appraiser notes it in the report, does not think it is significant, but the lender does. The lender will require it to be inspected and possibly repaired. The inspection will need to be done by a qualified person (licensed contractor, etc.).
C. The appraiser notes it and thinks it is significant enough to require an inspection. The appraisal values the house as-if the crack was not an issue, and the appraisal is subject-to an inspection by a qualified person. In this scenario, the lender (underwriter) could decide an inspection is not necessary and waive the inspection requirement (fund the loan); that is not usually the case. Usually, the lender/underwriter will go with the appraisal recommendation to get an inspection.
D. If there is no question in the mind of the appraiser that the issue needs to be fixed, then the appraisal will be made subject-to a repair. What that repair requires is up to a qualified individual to determine.

You could be proactive and get the inspection yourself. This way, you'll know up-front what an expert thinks and what the recommendations are to take care of the issue.
My advice is, if you decide to get the inspection done, get a qualified engineer to do it and not a home inspector; no disrespect to a home inspector (they are good at what they do) but what they typically do in a case like this is recommend the condition be inspected by (you guessed it) an engineer or a contractor.
The advantage of the engineer (in my opinion) is this: The engineer will provide an opinion if the crack is a structural issue that must be repaired or more of a cosmetic issue. Also (if you make this part of the engagement with the engineer) s/he can also provide an opinion if the crack on the garage affects the integrity of the living area (home).

Many garage foundations have cracks. Many times, they are just that and do not impact the structural integrity of the garage. Sometimes they do. A crack can also allow moisture to seep in and deteriorate the exterior wall covering, etc., etc. Patching a crack is a good idea (how to do it effectively depends on the material and what is causing the crack).

Forewarned is forearmed. If this is my house and I think the crack is significant, I'd want to get my own expert to tell me. If it isn't significant, I have the document that I can share with the appraiser and lender to prove it. If it is significant, then I can try to talk the lender into allowing me to wrap that repair into my home improvement loan.

Good luck!

 

[Pat314]

Thanks, Denis, for a great overview of what may happen and your advice... much appreciated. When you suggested getting an engineer's assessment, were you recommending an engineer rather than a contractor who does this type of work?

Here's more info...

-- The foundation is concrete, and the siding above is wood.
-- The concrete slab is below the dirt level so not visible.
-- The land slopes down behind our house, and the visible foundation is about 3 feet high where the crack is.

-- I see today that there are actually two vertical cracks that are roughly parallel and about 3 or 4 inches apart. Both cracks appear to go from the top of the foundation to the dirt level. It's somewhat hard to see what's going on because the cracks are behind a wooden staircase leading up to the rear garage door.

-- One crack is below the garage door frame, which is close to the wall between the garage and house. This crack is the one that looks like it had concrete poured over it previously and it may not really be a crack but a surface irregularity in the concrete from when the house was built that the builder didn't worry about since it's behind the stairs. Not sure, though.

-- The second crack is clearly that. It's width varies and is maybe 3/4" or 1" at the widest points. Based on measurements we did today, this crack is in the foundation wall separating the house and garage, and seems to be close to the edge of the foundation on the garage side (see diagram).



Any thoughts based on the new information?

Pat

 

[Pat314]

l probably should add that the garage doesn't have a room above it, nor a crawl space below, and doesn't seem to be slanting.

 

[hastalavista]

It is hard to say if the appraisal will consider that significant or not, so it is your call as to what, if any, proactive action (inspection) you may wish to take.

I'd recommend an engineer, although chances are good that a licensed contractor would be acceptable. I'd recommend the engineer because, all other things being the same, the engineer could probably make a better assessment of the structural issues that are occurring behind the scenes. As I said, cracks in garage concrete pads are not uncommon. Is it due to normal settlement or something else (who knows)? If normal settlement, does it impact the integrity of the garage and is there anything that is of concern to the house?

I don't know what the laws are in Massachusetts; here, in California, if you own and occupy the house and know of a potential issue, you are required to disclose it to any potential buyer. A good real estate agent (here) would recommend you get a report so you can determine what the crack means and how to deal with it. I know you are not selling your house, you are getting a home improvement loan. Nonetheless, knowing is better than not knowing.

I don't want to make a big deal out of it. You've identified it exists and now you know that an appraiser may call for an inspection. You can wait for that call or you can get ahead of that curve. If the appraisal report doesn't think it is significant, you'd be out the inspection fee but you'd be informed about the condition. If the appraisal report does require the the report and you want to still pursue the loan, you'll get the report then and deal with it in a few weeks rather than now.

Discuss it with your husband and make the decision that is best for you. You've lived there for a while so this doesn't sound like it is urgent and if not for the appraisal, you might not have given it much thought at all.
There is no wrong decision here for you to make!

Good luck!

 

[Tim The Enchanter]

You say you're on a hill, so seems to me more likely an issue than on flat ground.
I'd think start with a good reputable contractor that is local. They may give you an opinion / estimate for no charge.
An engineer may be needed later, but will probably charge to come and look.
Good luck. Please donate the 2 cents for this opinion to your favorite charity or beer fund.

 

[Pat314]

Thanks, Denis and Lee.

We need to watch what we're spending until the loan goes through, so we're going to have several contractors assess the situation and give us estimates. We found three on Angie's List with excellent references and reasonable prices and I'll call them tomorrow. I'm glad I found this forum... it helped us feel more confident about what we're doing!

No one replied about the little bit of peeling paint and algae on the siding. Can I assume they're not considered a big deal in a refinance appraisal for a house built in the 1980s?

Pat

 

[Tim The Enchanter]

e bit of peeling paint and algae on the siding

Should not be a worry, unless you go FHA.

 

[Pat314]

Nope, not FHA, just a conventional mortgage. Thanks!

Pat

p.s. I'll spend the $0.02 wisely!

 

[Elliott]

Seems to me like a logical place for a expansion or stress crack. Hey, cracks happen. I wouldn't think it would have any significant affect on structural support or on value. If you really have a concern, maybe you should hire a qualified engineer.