What inspections does a bank or mortgage lender need for loan approval?
Monday, June 25, 2018
There is no single, simple answer to this question. It depends on the lending institution, the type of loan, and the underwriter assigned to your loan. The one thing that is certain is that you should not offer to share your home inspection report with the bank. Only provide it if they insist on reviewing it.
Here’s a list of reports that may be requested, starting with the most likely ones.
- WDO (termite) Inspection - All VA loans for homes in areas on the TIP Zone Map labeled “Very Heavy” and “Moderate To Heavy” probability of termite infestation will require WDO report. Sometimes FHA and USDA do also. A particular lender may expect to receive one, but most do not. If an appraiser sees evidence of termite damage or infestation during the appraisal, a WDO may be requested as a follow-up. Lenders that require a WDO have a rule that it should not be more than 30-days old at time of closing.
- Septic System Inspection - May be requested for a property with a septic tank and drainfield. Florida law requires that this inspection can only be done by a licensed septic contractor or master plumber with an additional certification, and part of the inspection is emptying the tank to examine the interior. Flushing dye tablets down the toilet does not constitute a a septic inspection.
- Well Water Testing - This may be required for rural properties with a well providing water service to the home. Some banks just require a bacteria (e coli) test, but VA loan water tests have to also include lead, nitrates and ph. If the water test lab determines that there is a bacteria contamination in the water sample, the well will have to be sanitized and then tested again.
- Mobile Home Tie-Down Inspection - Most loans for mobile homes require this inspection report, and it must be certified by a Florida licensed professional engineer.
- Four Point inspection - This report will not be required by the lender but, since having insurance on the property at time of closing is a lender requirement, and insurance companies often require one for homes that are 40-years and older, you may need to submit this report to your insurer. The “four points” are roof, electrical, plumbing, and HVAC systems, and the insurer wants confirmation they are all in good condition.
- Roof Inspection - This is another report that will not be required by the lender, but may be necessary to secure the insurance necessary to close on the loan for homes that are over 15-years old. It is a simple one-page report stating the condition and additional serviceable lifespan of the roof, with a couple of photos attached.
- Wind Mitigation Inspection - Yet another inspection that is not needed by the lender, but many homeowner insurance companies now require it in order to bind a policy. Formerly it was an optional report. A wind mitigation inspection report evaluates the hurricane-resistant features of a home and allows discounts on the windstorm portion of your policy for storm-resistant construction.
The loan underwriter may also request special reports for a unique situation, such as an engineer’s report for a home that has recently had foundation repairs. If your loan is like most, your loan officer will call you two-thirds through the process and say “we just need you to submit a couple of more things,” one of which may be an additional specialized inspection report.
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To learn more strategies for getting the best possible home inspection, here’s a few of our other blog posts:
To read about issues related to homes of particular type or one built in a specific decade, visit one of these blog posts:
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