5 Important Things to Know About VA Loan Appraisals

When it comes to buying a home, there are a plethora of loans available. Different loans are designed to accommodate the unique needs of each homebuyer. Individuals who have served in the U.S. military are eligible for VA loans. To meet the criteria and be approved for a VA loan, the homebuyer must get a VA loan appraisal. The purpose of a VA appraisal is to estimate the value of the property and ensure it meets the VA's minimum requirements. Here are five important things to know about VA loan appraisals.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.

A VA-Approved Appraiser is Required

The VA requires the appraisal to be conducted by an individual on their list of certified appraisers. The appraiser then has two important tasks to conduct. First, they'll inspect the house to ensure the home is safe, sanitary, and structurally sound. The VA refers to this as “Minimum Property Requirements,” or MPRs, and specific requirements must be passed. Next, the VA-certified appraiser must determine the home's fair market value. This is similar to any other mortgage application where the lender determines the home's market value and ensures the buyer isn't paying an inflated price for the home. If either of these criteria is not met, the VA will likely not approve a loan for the property in question.

VA Appraisal Fees are Charged

Buyers are typically required to pay for the appraisal upfront. However, the cost will vary. The cost for a VA appraisal depends on the type of home being purchased and what state it's located in. As a rough estimate, buyers can expect to pay between $500 and $900. That being said, some buyers can successfully negotiate with the seller to pay this fee during the home's closing.

Appraisals Take About 1–2 Weeks

Officially, appraisers must respond to schedule the appraisal within two business days of receiving the request and then have five to 21 business days to complete their report (with some exceptions). In most instances, VA loan appraisals are completed in about 10 days. Buyers should plan for extra time during the closing process when buying a home with a VA loan.

Costly Repairs May Be Part of the Package

While the Veterans' Administration has strict guidelines for homes purchased with VA loans, this doesn't mean the house will be perfect. All it means is the home is safe, sanitary, and structurally sound. The appraisal does not take the place of a traditional inspection. All buyers should plan to hire an inspector to determine the true condition of the home. The VA appraiser will ensure the home meets basic livability, but that doesn't mean the property will be problem-free. The traditional inspection process will examine the home in far greater detail and identify other deficiencies that go well beyond what's listed on the VA loan appraisal criteria. In some cases, it's wiser to get an inspection first to know everything about the home before paying for a VA appraiser. This gives the buyer an option to walk away from a “money pit” home without paying several hundred dollars for the VA appraisal.

Buyers Can Turn to the Seller for Help

If the VA doesn't approve a loan based on the appraisal and the buyer still wants the home, buyers have a couple of choices. They can ask the seller to lower the purchase price, or they can make up the difference in cash. Another option is to petition the VA for a Reconsideration of Value.

VA loans are a good purchase option for eligible individuals. However, before getting started, it's important to understand what's involved with this type of loan. This way, buyers can make informed decisions throughout the process.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.