- While home sellers are legally required to be honest about any property damage in most U.S. states, most home brokers will request that a seller disclose any known property damage regardless of state requirements. Many forms of structural, pest, or electrical damage are not readily apparent to the seller, so buyers should always hire a licensed home inspector in order to identify any property damages. Banks will usually require some form of home inspection in order for a borrower to secure a mortgage.
- The FHA and almost all commercial lenders require a termite inspection. A home inspector will search for damage done by termites, which are wood-destroying insects. Lenders require a termite inspection, because homes that are seriously infested with these insects will suffer from severe structural damage over time. Mortgage applicants may qualify for a mortgage if there is no longer any evidence of termites, even if infestation damage is present. Inspectors usually offer a one-year warranty against termite infestation. Cold areas with no history of termite infestation may be exempt from inspection requirements.
- Some lenders require an inspection of septic systems, because some counties in the U.S., such as Trumbull County, Ohio, require homeowners to comply with new septic system requirements. This can result in thousands of extra dollars that the homeowner has to pay for upon buying the home. If properties are located in warmer areas that suffer from pest infestations, such as cockroaches, lenders may require a pest inspection. Other lenders may (but do not usually) require a property inspector to inspect the structure of the property. Counties and cities with rigid code requirements for new owners usually cause lenders to make home inspections a requirement before borrowers can obtain a mortgage.
- The Federal Housing Administration (FHA) provides mortgage insurance to lenders who back loans for lower- and middle-class home buyers. The FHA does not require a home inspection, but the organization does require an appraisal which has many of the same features as an inspection. The difference between the words inspection and appraisal result from the fact that the FHA is not legally liable for any errors during an appraisal. An FHA appraiser is most concerned with the safety of the property. An FHA appraiser will check for framing damage, lead, blocked crawlspaces, water damage, termites, drainage problems, faulty sewage systems, bad electrical wiring, poor roofing, and plumbing issues. Many damaged home components must be fixed before a lender may offer an FHA-backed mortgage loan. More minor safety hazards may be fixed after the home is purchased using an FHA-insured loan.
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