VA Appraisal Requirements & Guidelines
You’ve been approved for a VA loan, you’ve picked out the perfect house, and it’s time to start moving in! But before you close on your loan, your house will need to be appraised. The VA appraisal is one of the VA loan requirements when purchasing a home with a VA loan. A VA home appraisal will tell you a lot about the home you are about to purchase.
The VA Appraisal Process
VA home appraisals are meant to determine two things: first, the fair market value of the house, and second, whether or not it abides by the VA’s minimum property requirements (MPRs). Knowing the fair market value is important because it prevents borrowers from being overcharged for a house. It also lets the lender know if the borrowers are likely to be upside-down on their mortgage right off the bat. To determine the fair market value of the home, appraisers use the most current data from the housing market and the surrounding neighborhood.
The Department of Veterans Affairs has established its own minimum property requirements, and every VA-loaned home must meet these standards before it can be sold and occupied. In short, these guidelines determine if the house is safe to live in.
It’s easy to confuse home appraisals with property inspections, so here are the ways in which the two are different: In a nutshell, an appraisal is a general overview of the home’s functionality while a property inspection is a detailed analysis of the home’s physical condition. Appraisers do take the physical condition of a home into consideration, but it’s not their job to tell you every little thing wrong with the house. They may point out a couple of main flaws if those flaws are significant enough to affect the safety and functionality of the home overall. But if you want a thorough, comprehensive inspection of the house, you’ll have to invest in that separately. The VA recommends that you do this, as do most lenders and mortgage companies; it’s a great way to have a little added security and address minor damage or inadequacies before they create bigger problems down the road.
It’s true that, with their MPRs, VA home appraisals are more detailed than appraisals done on homes bought with conventional loans. Still, VA appraisals aren’t a guarantee that your house is in perfect condition, and they shouldn’t take the place of a real inspection. In fact, many homeowners have their home professionally inspected before the appraisal.
The VA Appraisal Fee
While there are many closing costs you can roll into the principle balance of your VA loan, an appraisal fee is not one of them. The VA appraisal fee is paid at closing and can cost anywhere from $300 to $500, depending on the location and the type of home. Additionally, borrowers must use their savings to pay the appraisal fee. If you ever decide to refinance your home with a VA streamline loan, you’ll be happy to hear that there are no appraisal costs required.
for more information on VA appraisal information in your area click here.
VA Appraisal Requirements
As we mentioned before, the twofold mission of the VA appraisal is to determine its market value and to make sure it’s safe, sanitary, and structurally sound. The MPR covers the most major quality concerns, such as adequate roofing, heating, and living space; available water, a safe basement, functioning mechanical systems, safe crawl spaces, and adequate property access. Appraisals also make sure homes are free of termites, lead-based paint, exposed wiring, and other safety hazards.
If major repairs are needed, the financial burden normally falls on the lender, but borrowers can help with the cost if they wish.
The VA Home Appraisal Process
VA appraisals are ordered by the lenders, and appraisers are randomly selected by the Department of Veterans Affairs. It’s a good idea to have your home appraised as soon as possible so any potential delays won’t interfere with the closing process. Again, it’s best to have your home inspected before it’s appraised: this will help you determine if it’s even worth buying in the first place.
Normally, appraisals take up to ten days to complete. The link we provided earlier for maximum fee limits also includes VA-regulated appraisal timelines for different states. But these timelines are flexible, and you’ll want to plan plenty of time for the appraisal to be done right, especially if repairs are needed.
The goal of an appraisal is to have the appraised value of the home as close to the sales price as possible. Otherwise, the loan amount may need to be renegotiated.
What If Your Home’s Appraisal Value Is Less Than Its Sales Value? Let’s say the appraiser marks your house at a lower value than the one you’re being charged by the seller. In this instance, you can renegotiate the price, settle the difference in cash, cancel the transaction, or petition for a Reconsideration of Value, in which the VA adjusts the value of the home.
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