The Importance of Pest Inspections When Getting a Home Loan

Purchasing a home is likely one of the biggest financial decisions you’ll ever make It’s not just about finding the perfect house in your ideal neighborhood There are many factors to consider during the home buying process, including costs like the down payment, closing fees, and getting a home loan approved. One thing that is often overlooked is getting a professional pest inspection done on the property. This thorough inspection can help provide peace of mind and potentially prevent serious issues down the road.

What is a Pest Inspection?

A pest inspection is when a qualified technician performs a thorough evaluation of the interior and exterior of a home to check for evidence of wood destroying insects, rodents, bed bugs, and other pests. It goes beyond what a regular home inspector looks for. They use specialized tools and methods to locate current or potential infestations that could cause structural damage or health hazards.

Some of the most common pests they inspect for include:

• Termites – These bugs feed on cellulose like wood and plant fibers They can severely compromise the structural integrity of a home if left unchecked. There are different types of termites that live in colonies underground, inside wood, or above ground that may be present

• Carpenter ants – While they don’t eat wood like termites, carpenter ants burrow into it to make nesting galleries. This can slowly destroy wooden structural elements over time.

• Cockroaches – Roaches can be unsanitary and spread germs around living spaces. Certain species also contribute to asthma triggers through the allergens they produce.

• Rodents – Mice, rats, and other rodents cause damage by gnawing and nesting. They also spread diseases and trigger allergies.

• Bed bugs – These tiny parasites feed on blood and live in cracks near sleeping areas. They are very difficult to eradicate once an infestation occurs.

The pest inspector will thoroughly check crawl spaces, attics, basements, around plumbing pipes, under flooring, in wall voids, and other areas pests may be hiding. Advanced tools like moisture meters, thermal imaging cameras, and borescope cameras help them perform a very thorough investigation.

Why Lenders Require a Pest Inspection

There are a couple instances when lenders usually require a professional pest inspection report before they will approve a mortgage loan.

The main reason is when the appraisal finds visible evidence of wood destroying insects, pest conducive conditions, or pest infestations in the home. The structural integrity of the property is important for the lender to secure their investment. They want to ensure the property is properly treated and any repairs are made before releasing funds.

The other case is for VA loans. The Department of Veterans Affairs requires a pest inspection for termite infestation to be completed in most states. Some states also require pest inspections for FHA loans. Always check with your lender on pest inspection requirements for your specific loan program.

Even if it’s not mandated, a pest inspection can give home buyers valuable information to negotiate repairs or offer price adjustments prior to purchasing the home. No one wants to find out they have a widespread termite infestation after they move in. It’s much easier to address pest problems when they are identified early.

What is Checked During a Pest Inspection?

A pest inspection is extremely thorough. Here are some of the main things the inspector will check for:

• Visible pest damage – The inspector will look for signs of damage caused by termites, carpenter ants, wood boring beetles, rodents, and other pests. This includes wood that has been tunneled through, gnaw marks, weakened structural elements, and more.

• Conducive conditions – They evaluate environmental conditions that can attract and support pests like excessive moisture, potential entry points, and places for them to hide and nest.

• Active infestations – All areas of the home will be checked closely for signs of current pest activity like live insects, cast skins, fecal droppings, exit holes, and rodent rub marks.

• Previous treatments – Evidence of previous pest control treatments will be noted, like pesticide markings, bait stations, and anything else indicating attempts to eradicate pests in the past.

• Inaccessible areas – Special tools are used to inspect difficult to reach spaces like inside wall voids, behind appliances, and under insulation.

• Crawlspaces and basements – Musty crawlspaces with wood-to-soil contact are highly conducive to termites and wood decay. Basements with moisture intrusion or gaps around utilities may provide entry for all sorts of pests.

• Attics – Hot, poorly ventilated attics can attract ants, wasps, squirrels, bats, and more. The inspector will look for holes, damaged soffits and vents, and leak signs.

• Garages and outbuildings – Detached garages and sheds are often not as well-sealed as the main home, allowing easy access for pests.

A detailed inspection report is provided outlining any pests found, the extent of infestations, conducive conditions noted, and recommended corrective actions.

Pest Inspection Process for a Home Purchase

If you are in the process of buying a home and need a pest inspection completed for your mortgage approval, here are the typical steps:

• The pest inspection should be scheduled as soon as possible once the purchase agreement is signed.

• Inform your loan officer that you will be having the inspection done. They can provide a list of approved inspection companies if required.

• The inspection will take 30 minutes up to a few hours depending on the home’s size and other factors. You do not need to be present.

• A detailed inspection report will be submitted to your lender within a day or two after the inspection is completed.

• If any evidence of wood destroying insects is found, your lender will require corrective treatment and repairs prior to closing.

• A follow up inspection must be performed after treatment and repairs to confirm resolution of any issues found.

• Once your lender has received clear follow up documentation, your loan can proceed to closing.

Be sure to review the purchase agreement to determine if the seller is obligated to cover the cost of inspection and any necessary remediation. If not, the buyer typically pays for it. Shop around for quotes, as prices can range from $75 up to $350 depending on your location and other factors.

Can Pest Issues Delay Closing on Your Mortgage?

Yes, identification of wood destroying insects or an active infestation during the inspection can delay mortgage approval until proper treatment and repairs have been completed.

Here are a few scenarios where pest problems may hold up closing:

• Termite treatment requires time – Depending on the extent of infestation, termite tenting or fumigation of the home may be necessary. This can take 1-3 weeks or longer.

• Extensive repairs are needed – If termite damage or carpenter ant tunnels have severely compromised walls, floors, or structural elements, repairs may be very extensive. Obtaining contractor estimates, repair work, and follow up inspections will add time.

• Further inspection is required – If an active infestation is found, additional testing to identify the full scope of damage may be needed before repairs can be made. For example, probing wood for hidden termite tunnels.

• There are disputes over who pays – Negotiations about whether the buyer or seller will cover the cost of treatment and repairs can cause delays.

To prevent pest issues from delaying closing, it’s best to schedule the inspection as early in the purchase process as possible. This gives adequate time to address any problems found. Be sure your real estate agent builds flexibility into the closing date in case delays do occur.

Can You Avoid the Pest Inspection Requirement?

Generally, no – if your lender requires a pest inspection due to appraisal findings or VA loan guidelines, there is no way around it. A clear report will be necessary.

However, it may be possible to negotiate with the seller to cover pest remediation costs if you do run into an issue. Or in some cases, you may be able to switch lenders if you find one that doesn’t require an inspection. But this is not advisable, as their rates and fees structure may be higher.

The best policy is to embrace the pest inspection requirement as an extra layer of protection. The cost is relatively minimal compared to the headaches a severe pest infestation can create. Imagine having to pay for termite tenting or major repairs after moving in – it can cost thousands. Insisting on an inspection now can save you big headaches and expenses later on.

Who Pays for the Pest Inspection?

For most loans, the home buyer typically covers the upfront cost for the initial inspection, any subsequent re-inspections, and any spot treatments required. However, there are a few exceptions:

• VA loans – The seller or lender pays for the initial inspection. The buyer covers re-inspection costs and any repairs.

• FHA loans – Varies by state. In some cases the seller pays for inspection.