A recent article in the Washington Post talks about lenders that are cracking down on homes with termite infestations. Homeowners and inspectors are not the only ones getting tough on termites and pests; lenders are having issues with them as well.
Many lenders are now asking if there's been structural damage to the house due to wood destroying insects. Lenders are now requiring that a licensed contractor provide a written statement verifying whether the insect damage was cosmetic or structural.
In the past, lenders did not pay as much attention to the wood destroying inspection reports, but now, buyers must be prepared to show the inspection report to the lender and provide a statement about the type of damage, if any was found. Lenders are requiring any damage to be repaired and permanently taken care of prior to settlement and closing.
Lenders in general are paying more attention to all terms on a real estate contract. It can provide them more information to allow for a risk-free loan, which would enable them to easily sell on the secondary market. Lenders want to make sure that those terms were properly executed and repairs were made if necessary.
Secondly, lenders understand that termites and other wood destroying insects can cost thousands and millions of dollars of structural damage each year, especially if they have multiple properties on their portfolio. According to the US Environmental Protection Agency, homeowners spend over $2 billion each year treating these wood destroying insects.
Buyers should be aware of any wood destroying insects prior to settlement and inform the lender of these damages. Homeowners insurance does not cover wood destroying insect damage, which is why lenders are being even more careful. According to pest control and extermination companies, "there are only two kinds of homes – those that have termites and those that will get termites". However, if buyers and homeowners are diligent in the inspection and repair, lenders will be more likely to loan freely on that property. Lenders are requiring that any reported damages be thoroughly inspected by a licensed contractor. Until then, the lender will not fully fund a loan. [Source]
When it comes time for the inspection, make sure that your home is well secured, repairs are completed and the necessary steps are taken in order for your loan to close on time.
For more information on home inspections and buying in the Columbus real estate market please contact me at any time.
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