Sr. Loan Officer | NMLS #161362
Branch NMLS #1912212
Posted On May 06, 2019
Most mortgage and real estate professionals may believe that a Veteran cannot pay for the pest inspection on a home purchase using a VA Guaranteed home loan. However, that’s one of the most misunderstood issues in the industry today!
According to Item 2 on the VA Notice of Value (NOV) the property must be inspected at no cost to the borrower. Since 2015, VA has allowed the pest inspection to be paid by the Veteran and counted as a part of the allowable 1% origination charges. The VA also authorized the inspection to be counted as a third-party inspection in some states so that it doesn’t impact the origination charge. Those states are: Alabama, Arkansas, Arizona, California, Florida, Louisiana, Mississippi, Oklahoma, Puerto Rico, Texas, and the US Virgin Islands. These states were given the additional change due to the substantial impact that the pest inspection presented as a negative influencer to sellers accepting purchase offers from Veterans wanting to use their VA Home Loan benefit.
An issue related to the pest inspection is who can pay for the repairs to the property identified on the inspection report. Many also believe that the Veteran cannot pay for these repairs. VA has long held that anyone can pay for the repairs, including the Veteran. The only caution to the Veteran paying for the repairs is that the Veteran would be fixing a home that they don’t own. The vast majority of companies that do home repairs will accept payment at closing and it is always recommended that the repair companies get paid from escrow rather than directly by the Veteran buyer. This secures the Veteran in case the loan does not close because the seller/owner of the home would be responsible to pay for the repairs if the sale falls through.