Three Things You Should Know About The VA Appraisal Process When Buying A Home With Your VA Home Loan
Posted on: 10 December 2018
If you are a service member or veteran, you likely qualify for a VA home loan through a company like VA Loan Lending. A VA home loan has many benefits over obtaining conventional financing. Most homes won't require a down payment, which can make the path to home ownership much quicker. The lender also won't require private mortgage insurance, as is customary on conventional loans when a down payment of 20 percent or less is put down. The interest will also be lower, which can save you a tremendous amount of money over the life of the loan. You can even pay the loan off early without penalty. The VA does require an appraisal, however. Here is what you should know about the Veteran Administration's appraisal process.
A VA Appraisal Is An Appraisal That The Home Meets Basic Needs
When the VA appraises a home you are interested in purchasing, they are looking for key elements. The first is whether or not its asking price is in keeping with fair market value. If the home is overpriced according to their calculations, it won't pass. This is because they can't support lending you money to purchase a property that will immediately give you negative equity. They are also making sure the home meets their minimum property requirements. First, the property must be a residence. Don't attempt to buy a commercial building with the intent of converting it because it won't pass. Secondly, it needs to be large enough to actually live in. The tiny house movement may be trending, but it won't qualify. The home needs to have enough square footage to constitute what most people consider a house.
Lastly, it must have working indoor plumbing, updated electricity, a heat source, and running water. The water can be from a well, and the home can have a septic system rather than a public sewer connection, but they will both have to pass quality checks. In short, they are making sure the home is livable, structurally sound, and safe dwelling that is worth the asking price.
You Will Still Need A Home Inspection
The VA's appraisal process is not a substitute for getting a home inspection. A professional home inspection will alert you to far more potential pitfalls than a VA home appraisal will. For example, an appraisal will make sure the furnace works. They won't tell you the furnace has surpassed its natural lifespan and will need to be replaced sooner rather than later.
Plan For The Expense
Every VA appraisal you need is going to cost you. In most areas of the country, this will be approximately $300-500, which you will need to pay out-of-pocket. With that in mind, be sure to choose properties you feel have a good chance of passing the appraisal process. Fixer-uppers likely won't qualify.
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