When buying a home, the inspections, title search, and the VA appraisal are critical reports for a buyer. These reports dig deep to determine the condition, value, and ownership of a property. One key report to a Veteran and the lender is the VA termite inspection. Unless you are looking for these pests, they can silently kill a home from beneath the floors and the walls. Termites among other pests are called wood destroying insects because they will eat the wood in a home. Also, don’t think that brick homes are safe! If there is wood in the house, it is susceptible.
VA Termite Inspection
First of all, termite inspections are not required by VA in all states, but one must be performed in all states where termites are prevalent. The Southeast U.S. is a prime area for termites plus other wood destroying pests. When the property is located in one of these states such as NC, SC, and Virginia, it is required. Furthermore, if the VA appraiser notes any potential signs or damage from termites, a VA termite inspection will be required. VA looks for service members, Veterans, and surviving spouses to have a home free of safety and infestation issues.
Depending on the state, Veterans, Realtors, and lenders hear other terms for the pest inspection. Examples include a Wood Destroying Insect Report (WDIR), CL100, or plain ole pest inspection report. Either way, they all serve the same purpose, just on a different form. Lenders and real estate professionals love abbreviations! So, don’t be surprised to hear WDIR or CL100 terms flying around.
VA Termite Inspection Requirements
When is a termite inspection required on a VA loan? VA Lender Handbook chapter 13 states “If the property is located in an area where the probability of termite infestation is very heavy or moderate to heavy according to the Termite Infestation Probability Map,” then VA requires that purchases, regular financing, and cash out refinancing include a VA termite inspection. The only exception to the requirement is a VA Interest Rate Reduction Loan (VA IRRRL). VA IRRRL’s do not require a termite report. While a Veteran is not allowed to pay for the inspection on a purchase, the Veteran is allowed to pay for this pest inspection on a VA refinance loan. The reason is that the Veteran already owns the house.
VA Termite Inspection Cost
One of the most popular inspection questions we hear during a VA purchase relates to who pays for the termite inspection. The simple answer in these Moderate to very heavy infested areas is, “Not the Veteran.” Yes, that is a VA requirement. Basically, on a purchase, someone besides the Veteran must pay for the VA termite inspection. Typically, the seller pays the cost, but it may also be the listing agent, buyer’s agent, or even the lender (as long as the Veteran does not pay it.) Most termite inspection invoices range from $50 – $100.
When Do VA Termite Inspection Reports Expire?
This answer depends on the lender and the actual report. Many lenders state the termite inspection expires after 30 days. But, OVM Financial allows a pest inspection to be up to 90 days old (UNLESS the form has an actual expiration date on it). In the case of the CL100 in SC, it expires after 30 days so it must be renewed after that period.
VA New Construction Termite Inspection Requirements
On new construction, the seller or builder must provide proof of the termite treatment type. These types include a bait system, wood, or soil treatments. Also, there are required forms the builder must complete and sign. Always, form HUD-NPCA-99-A is required on new construction. Furthermore, if the builder used the soil treatment method, HUD-NPCA-99-B must be completed and signed by the builder.
What Do Pest Inspectors Look For?
- Signs of active or previous infestation of wood destroying pests
- Signs of the house being treated before
- Areas conducive to subterranean termites
- Moisture issues
- Damage caused by termites and moisture
VA Termite Inspection Solutions
Many lenders and real estate agents go straight to the section that states if there are termites or not. On the WDIR, everyone hopes for the checked box that states that there is no visible evidence of infestation. Then, too many stop there. Don’t be that Realtor! It is so important to read the whole report. I can’t tell you how many times we have received an email that says “Here is the clean termite inspection.” Then, after reviewing we find there are moisture, wood rot, or other issues mentioned. So, here are some common issues and potential remedies. Keep in mind that each VA lender may treat these situations differently.
Evidence of Active Infestation
If there is an active infestation, the house must be treated by a professional before closing. Once completed, either proof of treatment or an updated termite report is required to close. In the case of active infestation, the inspector will note the affected areas
Visible Evidence of Previous Treated Infestation Which Now Appears to be Inactive
This line is OK since there is no active infestation. Just like above, the inspector will state the location of the previously treated areas.
Areas are Conducive to Termites Were Noted
Always read this section of the report thoroughly as this is the most overlooked area. Common remarks in this section include the following:
- Wood debris in crawl space. It is a good idea to remove pieces of wood from the house crawl space. Usually, removal of wood pieces is not required.
- Areas of the house containing wood are in contact with the ground. Therefore, wood in contact with the ground may cause an easier infestation. Typically, this is just a note for the homeowner to watch.
- Signs of wood destroying fungi on floor or crawl space. This will typically need correcting before closing.
- Moisture readings at excessive levels. This is subject to a VA underwriter’s discretion, but for most lenders, levels over 20% require correction. Remedies include installation of a dehumidifier or a moisture barrier. A moisture barrier is a sheet of plastic covering the crawlspace ground. Thus, it keeps excessive moisture from damaging the house. Also, consider if opening crawl space vents are preferable.
- Damage to the house by the water, pest infestation, or fungi. If this language appears, repairs are required. Correction and verification by a professional licensed contractor is the typical method of correction. Furthermore, if the level of damage could be structural, a structural engineer inspection may be required.
VA Termite Report Summary
So, keep in mind that each termite report scenario may be different. Therefore, requirements and remedies vary as well. Besides lender and Veteran’s Administration requirements, it is key that the Veteran and their representatives are happy with the findings and corrections if necessary.
Another key piece of advice is to provide the VA termite inspection to the lender and buyer ASAP. It is much better to request, negotiate, and perform repairs early rather than the day of closing. A termite inspection is a small price to pay to feel comfortable!
Termite Inspection Requirements for Other Loan Types
Again, this depends on the lender. Some lenders require a termite inspection on all loans while other lenders do not expect them. Foremost, if an appraisal mentions possible termite damage or moisture issues, a lender will require an inspection.
OVM Financial usually does not require a termite inspection for existing construction unless the appraiser requires one. Although, if there is a termite inspection fee on the closing disclosure, we must see the report. Then, if there are issues, they must be corrected. In the end, a termite inspection is a small price to pay to feel comfortable with the home structure.
Renovation Loans to Repair Termite Damage
Termite damage can range from a small amount to major structural issues. In the case of a purchase, a foreclosed home or a regular sale could need a lot of work. That’s where a purchase renovation loan comes in handy. At OVM Financial, we have a variety of renovation loans that help buyers purchase and renovate a home all in one loan. Also, a homeowner may find that they have extensive termite damage and it may even be structural. In that case, again a renovation loan. So, if looking to refinance or purchase a property in need of home improvements, check out these wonderful products.
- VA Renovation Loan – Finance up to $75,000 in nonstructural renovations
- Fannie Mae Homestyle Renovation – Primary, second home, and investment properties
- FHA 203k Renovation – Learn how this and other renovation loans compare
Contact OVM Financial for a VA Loan
If you are interested in a VA home loan to finance up to 100% of the purchase price of a new primary residence, contact our VA loan experts today. We can answer all of your questions to help you feel more at ease when purchasing your dream home, so it is not a nightmare!