Primemax Mortgage Group

Why the Wood Destroying Report "WDIR"? Determining Termite Damage

Termites may be small insects that often stay out of plain sight, however, the damage they leave behind can quickly become an issue—and one that’s very expensive to fix. In the U.S. alone, these wood-destroying insects are responsible for billions of dollars of property destruction every year.

As a prospective homebuyer, you’ll want to know if these destructive pests are causing damage to the property or have left some behind in the past. A must when buying, selling, or refinancing a home, the WDIR (Wood Destroying Insect Report) is an inexpensive way to avoid problems before you seal any deal.

What is a WDIR?

A Wood Destroying Insect Report (WDIR), or a termite certificate, is a legal document usually required by the lender that has been issued by a licensed inspector. It states whether or not a particular structure has an infestation or has had one in the past. More specifically, it determines the following:

• Does the structure, or home, have a current infestation?
• What type of insect is causing the infestation?
• Has the structure had an infestation in the past?
• Is there structural damage due to current or past infestations?
• Has the home been treated in the past for infestations?

Termites are not the only wood-destroying insects that are common in the state of Pennsylvania, although they often are the most damaging. Some others include:

• Powder post beetles
• Carpenter ants
• Carpenter bees
• Wood-destroying organisms (WDO)

If you are using a real estate agent they likely will have a pest control professional that they recommend for a termite certificate, or WDIR. Make sure to ask them or research some good local companies on your own. A qualified professional will be able to spot any current wood destroying insect infestation or damage from a previous one. If they inspect the dwelling and find nothing concerning then that is one less thing you need to worry about as you look to close on your new home.

1. Tax return transcripts from the IRS: This is to verify that the tax returns provided are the actual ones provided to the lender
2. W2 transcripts: This verifies the W2’s provided are the actual ones
3. Income tax debts owed: If money was owed on the most recent tax return, it could still be a potential outstanding lien or payment
4. Additional business losses: There could be a business that has losses and could reduce the borrower’s total income
5. Tax returns are actually filed: We have had a couple recently where borrowers provided tax returns for previous years that were never filed. This would never work because the tax returns could be change or never even get filed
6. Extra properties that are owned: If the borrower is using a first time buyer product, there can’t be other properties listed or mortgage interest reported. Always disclose property you own
7. Un-reimbursed employee expenses: If a borrower is commissioned income accounting for over 25% and there are un-reimbursed employee expenses written off, it could lower the qualifying income
8. Business expenses paid by the business: Some products require that the tax returns show the debt being written off by the business to exclude the debt from debt ratios
9. Determining nontaxable income: Some sources of income are nontaxable and to gross up the income, it must be shown as non-taxable income on the returns or some cases not shown on the returns if allowed
10. And of course a good thing, trying to find any income that can be counted for the borrower

We get the argument a lot from borrowers that this should not matter but most do not realize the amount of fraud or mistakes that are on tax returns and that is why lenders have to obtain transcripts of tax returns to close a mortgage loan in many circumstances.

So to avoid delays or issues late in the process, it is best to provide all documentation requested at once and up-front.  Then it can be reviewed, accurate income and debt ratios calculated, and have more confidence later in the process.