What is a VA Appraisal?
VA appraisal is a process that helps lenders determine a home’s value. Note that VA appraisals are different from conventional appraisals.
The costs of the appraiser vary by state and appraisers have a responsibility to ensure that your property meets the Minimum Property Requirements specified by the U.S Department of Veterans Affairs.
Since veterans look for homes that are safe and meet MPRs standards, VA appraisal helps to ensure this. For instance, the house must have quality roofing and damaged-free foundations. And in some cases, VA appraisal guidelines may look strict. For instance, if veterans want to purchase old properties, they need to search for well-maintained houses, making it a challenge to find their desired house.
Components of The VA Appraisal Process
The VA process includes two major steps that decide the result: inspection and valuation.
Valuation
The first objective of the VA loan appraisal is to determine a “fair market value” of your chosen property. Your VA home loan lender will finance whichever is less, the purchase price of the house or appraised value.
In this step, the appraiser will analyze the recent home sales, and compare them with your chosen property. They might look at the neighborhood, the size of the property, and the features of the house.
Inspection
Inspection is the second step that is a major factor in the assessment of the home’s value. The appraiser will check the HVAC system, windows, doors, and other things. They will determine the number of rooms you have. This also includes what facilities and amenities you’ll get with the house. Additionally, they will inspect the overall condition of your property.
VA Minimum Property Requirements
VA loan program requires the house to meet minimum property requirements. These eligibility criteria have been designed to ensure that veterans and their families don’t have to experience trouble in near future. Also, the house needs to be safe and secure. You and your family’s safety and security or important. A front door that doesn’t lock properly and a gas leak is the last thing you want to deal with after buying a home.
Here is the VA appraisal checklist that you need to know.
- working heating, electric, and cooling systems
- house needs to be sufficient in size to meet basic regular needs
- quality roofing that can stand harsh weather
- continuous and clean water supply
- free of insects, dry rot, and fungus that can destroy wood
- no lead basement paint
- sanitary sewage disposal
- clean and updated crawl and attics spaces
Your heating systems also need to meet some standards. You need a traditional backup system to reduce any risk of problems. The appraiser might look for things that are specified by your lender. They can assess the pipes, kitchen cabinet condition, basement conditions, and much more. Also, they will create a report at the end of the assessment and provide it to your lender. Then, your lender will decide whether they can give you a loan for the property or not.
How Long Will it Take? The VA Appraisal Timeline Explained
Since the VA home appraisal checklist is long, it requires around 10 days for completion. 10 days is the typical timeline for the appraiser. It can vary by the type of property and lender you choose, but the process doesn’t end here. Your lender and appraiser will take more time to evaluate the appraisal. Here are some steps that will require a few more days before you get a loan.
VA Appraisal Report is Created and Uploaded
Once the appraiser appraises your house and conducts all the property research, they will start preparing a report. This report will be brief and will include every aspect of the inspection and evaluation. It might also include the improvement and repairs your home needs. You can also find the appraised value of the house in the report.
This report is designed to ensure that your chosen home meets all the VA loan requirements. It also needs to check every point of the VA appraisal checklist. Since your lender uses it to make an underwriting decision, it should have detailed information about the comparable properties and valuation.
VA Appraisal Report is Reviewed
Once the appraiser prepares the report, your lender will review it. This can take a few days, as the VA loan lender might already have several applications to check. Also, when they get the report, they check it thoroughly and compare it with their requirements.
If the report shows that your desired property doesn’t meet certain requirements, the lender has to make a decision as to whether they can approve the loan amount you are asking for or if updates on the property will be required. Meeting all of the MPR standards is critical and your home loan underwriter will see these possible issues. If a home doesn’t appraise it’s an opportunity to have the seller lower the price to the appraised value and fix any major issue. Besides, if they don’t do it for you they will lose you and anyone else needing a VA loan, VA construction loan, and possibly other home loan types as well.
The Notice of Value is Issued
The lender will issue the notice of the value. It gives a certain value that your property needs to fall in. You can use it to discuss with your seller to persuade them to reduce the sales price of your future home so that you don’t pay more than market value. The VA loan appraisal protects you and us so that you don’t overpay! Lenders have a compliance duty to maintain the notice of value for 24 months. Lenders must maintain copies of all loan origination records on VA guaranteed home loans.
If the home appraises for more than the VA home loan limit of your city that’s ok. Just remember that if your loan amount does exceed the loan limit then you might need to put money down. Let us calculate your current eligibility.
Clarifications, Repairs, and Negotiations
At this point, you need to try to get your loan approved. You can do this by clearing up some conditions. If you notice that your report includes information that you feel is incorrect, you can discuss it with your lender. Also, if the lender has issues with the major repairs of the property, ask the property owners to fix things before selling you the property. As a result, your desired property will meet MPR standards.
Lastly, if the seller is asking for a higher price than what you can get from the loan, negotiate with them. Show them what their home is lacking and how this will affect many other buyers, not just you. Try to lower the price to the appraised market value and have any major repairs fixed. If you need a VA renovation loan then it’s possible to build in upgrades and repairs but on a VA purchase, you cannot.
Approval
Finally, the waiting time is over. If the lender observes that your home and you are both approved to finance, they will approve your application, preapprove you, submit your file to underwriting, obtain a clear to close, and then set you up with a closing and funding date.
Before signing, make sure to check all the clauses in the contract. Think about whether you agree with the loan requirements. understand how much additional cash you might have to pay the property owner. When your loan will be approved, you will be free to purchase your desired property and can start planning your life in it.
VA Loan Home Inspection Checklist
VA home loan inspection will require you to tick the following things on the checklist.
Home Infrastructure, Exterior, and Systems
These are the most important things to inspect in your house. Quality infrastructure, exterior, and systems ensure that your house is safe to live in. It shows that the property doesn’t have any life-threatening issues. Mainly the overall condition of the property will be analyzed and documented. This includes both interior and exterior of the house. A VA appraiser can also recommend repairs needed to meet MPR guidelines. When you are purchasing a home you’ll have an opportunity to get a home inspection that is separate from the VA appraisal. However, a VA appraisal is a little more in-depth than a conventional home loan appraisal. For example, a termite inspector that’s approved by the VA will do a termite inspection. You can’t have active termites in the home you’re buying to get a VA loan. The home’s value is based on many factors such as upgrades, quality of flooring, roof, structure, comparable homes in the area, HVAC system, fixtures, amenities, landscaping, and so on.
Roof, Attic, and Foundations
Roofing and foundation problems can cost you a lot of money. You need to pay for labor costs, expensive supplies, and products to install. It’s hard to get this kind of money in emergencies. Therefore, VA appraisers inspect homes and prevent you from buying properties with damaged roofs and old foundations. Having a strategically designed attic is also important to ensure proper ventilation of your house and prevent roof leakages. The attic is on the checklist as well, so a damaged attic can cause problems in the HVAC system, roof, and other areas of your house.
Walls, Windows, Doors, Floors, and Interiors
The home inspection checklist will include walls, windows, floors, doors, and interiors. the appraiser will look for insects in the wooden doors and windows. They will ensure whether the floors require finishing or updating. The condition of the interior will be an important thing included in the checklist. Broken doors, windows, moldy walls, leaking stoves, broken ACs, and leaking toilets are all issues that should be repaired. Let’s talk about a VA renovation loan if you know that you’re going to have issues like this and the seller doesn’t have money to fix the issues.
Plumbing Systems
Damaged, leaking, and old pipes can cost you a lot of money. You need a house that is free from plumbing problems so that you don’t need to invest in improvement projects. Therefore, the VA home loans checklist contains an inspection of the plumbing system. A leak under the foundation could damage the foundation and hurt a property’s value. You should have a separate inspector do a home and foundation inspection.
Electrical Systems
Since the property you’re purchasing will be your primary residence, it needs to include a working electrical system. Dated and damaged electronic systems are useless for you. The chances are that you might have to purchase new machinery and systems. But the loan will not be enough to purchase an electronic system along with the house itself. This is why the checklist will include electrical systems. Electrical hazards aren’t acceptable. Your circuit box should be functioning properly without blown fuses.
Appliances
Sure, the number of appliances you get with a house may seem impressive, but what good is it if the appliances don’t work? This is why VA land loans include the inspection of the appliances to estimate how much money you will need to replace and upgrade them.
VA Appraisal Checklist
VA appraisal checklist will include the followings that your desired house needs to have.
Heating, Electricity, and Water
These three things are crucial to comfortably living in a property. The appraiser will ensure that your chosen house has these basic things. If there are electricity and water problems, and no heating system, you might not get a loan.
Roof and Crawl Space
The roof and crawl spaces need to be in good condition, as well as your attic to protect your house from the harsh outside environment. This ensures that you and your family will not experience any problems due to the weather. Installation is needed to insulate your home so that you keep it efficient. Craw space to the AC, safe wiring, and aspects such as no signs of rodents are important and will be looked at by your Inspector. Don’t count on a VA loan appraiser to do a full VA home inspection. Remember they do what the VA wants them to do in a systematic way that the lender will utilize.
Utilities and Multi-Unit Homes
The appraiser will also write the type of your house. How many stories does the property have? Is it a multi-unit home or a one-story building?
Painting
Whether your property requires interior or exterior painting, it can cost hundreds of dollars. You can only avail of VA benefits if your house doesn’t require painting on walls, doors, windows, garage, and other things.
Defects and Structural Deterioration
Structural deterioration and defects may reduce your chances of getting a loan. Your appraiser will ensure that there are no structural and foundation problems that you need to fix later.
Location
Location, location location is what you always hear! It’s for good reason. Everyone’s desire for location is unique. Location is a huge aspect of value. The appraisal report will also include the location of your property. The appraiser helps lenders decide whether your house value is accurate based on the location.
The Most Common Appraisal Issues
Problems With Home Valuation
Each home is different from the others. Comparing them to determine the house value does not always give accurate results. That’s why an appraisal is detailed and covers many aspects that we’ve mentioned. Home size, land size, location, and details mentioned above all affect the value. Make sure your realtor does a market analysis that you agree with before making an offer. Let your VA-approved lender look at that too to see if it makes sense. Be prepared for what you will do if the home you want doesn’t appraise. Have some cash reserves, another purchase option, or use it as a tool to get the price to where it needs to be before starting the VA loan process.
Problems With a VA’s Minimum Property Requirements
It’s better to hire a home inspector immediately upon executing a sales contract to not waste valuable time. Problems with MRPS can be presented to the seller in an amendment to the contract and provided to your underwriter.
Bottom Line
If you want a VA home loan, you will need to go through the VA appraisal process. Your house needs to meet all the requirements of the VA appraisal checklist to help you secure the loan. If not, you might have to look for other properties that meet the criteria.
If you need help understanding this process and want to know what you can do to secure the loan, you can contact highly experienced and skilled experts, Security America Mortgage. We can help you meet the criteria of the loan so you don’t miss out on an opportunity to purchase your dream house.