Can the presence of termites screw up a home loan for a beach home? You betcha they can.
Dian Hymer, an author on Inman News, writes this about termite clearances in her column :
In this era of consumer awareness, most buyers require a current termite inspection of a home before they'll agree to buy it. However, a termite clearance is not always part of the agreement. Whether or not a termite clearance is required to close a home sale depends on the buyer's lender and on the terms of the agreement negotiated between the buyer and seller.
Buyers who purchase a home using an FHA or VA mortgage -- or a low-down payment first-time buyer mortgage program -- may be required to provide the lender with a termite clearance on the home they're buying before the lender will fund the loan. In this case, the sale can't close without a termite clearance.
Even when buyers use conventional financing, the lender is likely to require a termite clearance if the property is in a state of disrepair, particularly if hazardous conditions exist. For example, if a deck is dry rotted to the point that it's dangerous to walk on, the lender will probably want it to be repaired before they'll be willing to loan on the property.
So, what are your options as the potential buyer of a beach home ?
1- First, talk to a local real estate expert about a strategy before you buy.
2- Have that expert negotiate treatment for the termite infestation.
3- Waive the termite clearance clause in your contract. This can be very dangerous so you should consider defaulting to tip #1.
Government lenders require termite clearance, period. Conventional lenders allow for the termite inspection to be waived with acceptance of a contract NOT as an addendum to the contract. This means that if you want to waive the clearance post facto (because an infestation might screw up your loan), it ain't gonna work