Are VA Loan Appraisals Tougher?
Homeownership is a process. Part of that process, regardless of the loan type, involves getting a professional appraisal of the house being purchased to determine its value. While most property appraisals share some common elements, a VA loan appraisal is known to be more involved when compared to appraisals required for other loan types. That is to ensure that the homes purchased by veterans and active-duty service members are fiscally and structurally sound.
What Is a Housing Appraisal?
A licensed professional will conduct a home appraisal to analyze the home and provide a report on the property’s value. Recent sales of comparable homes in the area, an analysis of the property, and the appraiser’s expertise are all used to evaluate the property’s net worth. Mortgage lenders require an appraisal to help gauge risk of the loan amount compared to the property’s actual value. Essentially, lenders don’t want to find themselves upside down on defaulted loans.
Home appraisals typically cost between $300 and $400, but can start at $600 in some metropolitan areas, with fees exceeding $1,000 for larger or more complex properties. Appraisals of government-backed loans, like FHA and VA loans tend, to be more pricey, as these evaluations assess whether the property meets minimum structural and safety requirements set by the federal agencies that will guarantee the loans.
For VA (and FHA) loans, the average appraisal cost is between $400 and $500. The U.S. Department of Veterans Affairs limits how much appraisers can charge for their services, ranging from $425 to $875, depending on the state and (sometimes) county.
But with Hero Loan, you don’t have to worry about any of that, as we pay for your appraisal!
What Is the VA’s Appraisal Process Like?
Once the interested homeowner has signed a contract on a house, the lender will order for an appraisal to assess the property’s value and condition. This will be conducted by an independent VA appraiser. Three factors can influence any VA appraisal: VA appraisal guidelines, the appraiser assigned to the property, and the individual lender. These are the steps to expect throughout the VA’s appraisal process.
- The appraiser will assess the property’s value. Establishing an appraised value means the VA appraiser will determine the “fair market value” of the property. This is achieved when the appraiser looks at a minimum of three recent comparable home sales, or comps, based on factors such as property size, age, and location. For more unique or isolated properties, this can be more difficult to assess. Lenders will usually need at least one good recent comparable home sale to move forward on a loan. Once a property’s value has been determined, the appraiser uploads that information into a report via the VA’s secure web portal. That happens within 10 business days, on average.
- The minimum property requirements set by the VA must be met. The main aspect that sets an appraisal for a VA loan apart from appraisals for other loan types is that homes appraised by the VA must also meet the requirements set by the VA’s Minimum Property Requirements (MPRs). These requirements address the property’s interior and exterior safety and value.
- The buyer decides how to proceed with the contract. If the property meets the VA’s MPRs, the buyer may proceed with the purchase. If the property is found to be in need of repairs, the interested buyer may ask the seller to address those issues or lower the price. In cases where the appraised value of the property is irresolvable, the buyer should eat their losses and walk away.
It is important to keep in mind that an appraisal is not the same thing as a home inspection. Home inspections take a more detailed look at properties under contract. They can uncover defects, problems, and possible looming issues that appraisals might not. While home inspections are not mandated, they are highly recommended. After all, with an investment as large as a home, it’s important to know exactly what you are getting into.
What Is Covered Under a VA Housing Appraisal?
VA appraisals are meant to help buyers ensure that homes being purchased are considered in good repair, not fixer-uppers. MPRs ensure that basic conditions are met. According to the MPRs, a VA appraiser will check that the following criteria are met:
- The property must be a residential property
- The property must have adequate living space
- The property’s mechanical systems, like the electric and plumbing systems, must be deemed usable and safe
- The property’s heating system must be adequate (able to keep a home’s temperature above 50 degrees Fahrenheit)
- The property must have a safe water supply available
- The property must have adequate roofing with reasonable future utility (roughly between three and five years)
- The property must have basements or crawl spaces that are free of debris, clear, and provide proper ventilation
- The property must be safely accessible from the street
- The property must not be in violation of any health or safety hazards (e.g., no asbestos, nuclear waste, or radon)
- The property must be structurally sound without defective construction issues
- The property must be evaluated, and if applicable, treated for mold, termite, or fungus infestations
- The property must have any lead-based paint scraped and repainted, covered by drywall, or removed entirely
As you can imagine, these guidelines can be frustrating for military buyers who are considering older homes in need of renovation. It is recommended that potential veteran and active-duty service members be mindful of this list when looking for a home to buy.
How Can Hero Loan Help You?
Our veterans and active-duty service members have provided us with invaluable services that collectively better our lives. At Hero Loan, we recognize they deserve specialized attention. Our mission to help military borrowers purchase the home of their dreams efficiently, and transparently is the cornerstone of our family-style business model. Our team of friendly lending experts use a face-to-face approach to help our clients qualify for a loan in less than five minutes, with closing periods in as little as 14 days. There’s no need to worry about the hassle of paperwork, as we have streamlined our services from start to finish. And, we’ll pay for your appraisal!
Hero Loan also firmly believes in giving back to its community. We are proud to support the efforts of our veterans by contributing to the Fisher House Foundation, which directly gives back to our veterans.
You shouldn’t have to take on the stress of it alone. Allow us to assist you and call us today at (866) 222-0219 to speak with a VA loan representative. Or, reach out to one of our lending experts, who will be glad to address any inquiries you may have through our live chat option.