Existing Inspections and VA Appraisal Fees

 

Deciphering the VA Lender’s Handbook Chapter 10 Part 11

 

If you’re looking at buying a house, chances are the house has already been inspected at least once. You may have already had the home inspected, or another prospective buyer already had it inspected and then decided not to buy it. In cases like these, it stands to reason that you may want to use the notice-of-value from that inspection in lieu of the VA appraisal. For the most part, the VA does not allow this. There is, however, one exception to this policy. We’ll talk about that exception, and then we’ll go into the VA appraisal fees in all sorts of different scenarios and talk about what the borrower is allowed to pay for. First, the only case where a HUD value notice can be converted for VA use:

Veteran Home Purchase

The situation must meet all of the following requirements: first, the appraiser must be a VA fee panel member and not a staff employee of the lender. Second, the property must have been appraised as an individual case (as opposed to a “master” appraisal that covers multiple properties in a development). The property must not already have a valid VA value determination and the appraisal was originally done by a HUD inspector because the buyer wasn’t intending to use VA financing at the time of the appraisal. This can happen in two ways: either the buyer changed from HUD to VA financing while under contract, or a previous buyer using HUD financing fell through. Next, the lender needs to submit a written request for conversion along with VA Form 26-1805, the HUD value notice, and the original appraisal report. Should all of the following requirements be met, the HUD value notice can be used in lieu of the VA’s value notice.

 

Now for VA policy on the fees for appraisals. The Handbook states the following as the VA’s official policy: “The maximum appraisal and inspection fees allowed by each VA field station is based on customary fees for similar services in that station’s jurisdiction. Regardless of the amount of the maximum fee, appraisers and inspectors must not charge veterans more than they charge other clients for similar services.” In cases where the home is being appraised for liquidation, the appraisal requester is required to pay the fee. In cases where the borrower attempts to pay the defaulted amount back after the appraisal has been obtained, the cost of the appraisal is added to what the borrower owes.

 

Never, at any time, can a veteran borrower be charged for any portion of a “master” appraisal. If a builder or anyone tries to charge you for the master appraisal, slap a copy of the VA Lender’s Handbook down on the table and tell ‘em to study up. A veteran borrower can be charged for inspections on properties during construction, but cannot be charged for any re-inspections that are due to the builder’s noncompliance with VA requirements, the builder’s failure to provide access to the property or have the work ready for inspection, or the inspector’s failure to arrive at the appointed time. If an appraiser must travel outside of their normal business area, they are allowed to assess an additional fee to cover the portion of travel outside their normal area. The VA is also careful to mention that travel must be by the most direct route and the billing must include a breakdown of the mileage.

 

If the fee appraiser reports fee payment issues, the VA can allow them to require payment in advance from a particular requester if that requester has regular issues providing payment in a reasonable time frame and the appraiser has provided written notice to the requester about the issue and its consequences and the requester does not adequately respond. The VA must provide written authority to the appraiser in order for the appraiser to be allowed to require advance payment. The VA may provide such authorization after reviewing the appraiser’s case. Generally, this won’t affect borrowers, since you don’t regularly request appraisals, but if you’re working with a lender who doesn’t have the best record with paying appraisers, you may be required to front the cash for the appraisal sooner rather than later.

 

Appraisals for Manufactured Homes

Manufacted Home AppraisalManufactured homes are a little different from normal homes. They are not constructed the same way as normal homes, and they’re usually smaller and cheaper than normal homes as well. Because they’re their own type of home, they have a unique VA appraisal process.

When it comes to getting a manufactured home appraised, one of two situations applies. Either a) the manufactured home is already in place and permanently affixed to a foundation and you are purchasing it just like a normal home, or b) the foundation for the home is not finished yet and/or the home unit has not been installed yet. In the first case, the home is usually appraised like any other home, but in the second case, there are special appraisal requirements, and you will have to provide something called “construction exhibits.”

Construction exhibits for manufactured homes are actually pretty similar to those for conventional homes, but if you’re buying a manufactured home, the burden of providing them may fall on you.

Check with the company you’re getting the manufactured home from and let them know you’re buying the home with a VA loan. They may already know what they need to provide you. Your lender may also be willing to contact them on your behalf to get the information the VA needs.

In fact, you may want to hold off on promising to purchase anything until you’ve got reasonable assurance that the home is going to meet the VA’s minimum property requirements. Work with your lender for specific guidance on your situation.

The construction exhibits need to include both specifications for the foundation of the home and a plot plan. If the home is double-wide, details need to be provided on the mating line piers. Also, a foundation plan that shows the location and cross-sectional details of the supporting piers is required, along with drawings of the foundation anchorage.

Unless the home is already physically located at the site that is to be appraised or the appraiser has access to the dealer’s lot, the floor plan of the unit and the exterior elevation drawings/photographs of the front and rear of the home need to be provided to give the appraiser a good feel for the house.

If the home is in a state that requires the underside of the unit to be completely enclosed, details of that closure are required. If there are on-site improvements to the manufactured home, like a deck or a garage, that will also be financed with the VA loan, the VA will need construction exhibits of those additions as well. On top of all of this, the VA clarifies that there are local requirements and building codes that may require revisions to the information in the manufacturer’s technical installation manual, and these revisions need to be included in the construction exhibits.

Fixed Manufactured Home

Lastly, the construction exhibits need to include a signed statement for a qualified individual that states that they have examined the home and it meets the VA’s Minimum Property Requirements. This qualified individual should be an architect, engineer, or home-builder, and also be properly identified.

The Handbook stipulates that the signed statement read as follows (or equivalent): “I certify that the construction exhibits for (identification of the property by house type, lot, block, subdivision name, etc.) meet all local code requirements and are in substantial conformity with VA Minimum Property Requirements, including the energy conservation standards of the 1992 Council of American Building Officials’ Model Energy Code and the requirement for lead-free water piping.” In lieu of this certification, the VA will also accept the HUD 92541, Builder’s Certification of Plans, Specifications and Site.

However, in order for the VA to accept that HUD form, it must be completely filled out and provide the same certification that the VA asks for in the above paragraph. The important thing here is that a qualified professional has examined the property and found that it meets all applicable VA Minimum Property Requirements and local codes.

The goal behind all of the construction exhibits is to ensure that the veteran is getting suitable housing with their VA loan benefits.

VA Appraisals – Construction Exhibits for Proposed Construction

 

Deciphering the VA Lender’s Handbook Chapter 10 Part 9

 

In the last few articles, we’ve mentioned “construction exhibits” a few times. For many people, the definition of a construction exhibit is somewhat foggy. Thankfully, the VA Lender’s Handbook has a large amount of information on these, and we’ll be providing all the information that a borrower might want to know from the Construction Exhibits section of the Handbook. Construction exhibits are required for any properties that are being appraised as “proposed or under construction”. You will not need to worry about construction exhibits for new constructions (you are the first person to occupy the home) or existing constructions (you are not the first person to occupy the home).

VA Construction Exhibits

A set of construction exhibits has some things that it must include. First, it needs the specifications on the home as shown on VA Form 26-1852. The builder can use a different format to provide the specifications as long as they are agreed-upon by both the builder and the veteran buyer and are detailed enough to suit the VA appraisal purposes. The construction exhibits must also include a plot plan, all exterior building elevations, the foundation or basement plan, a plan for each floor, sectional wall details, and a certification signed and dated by a qualified individual such as an engineer or architect (or builder, usually) that states that the exhibits provided meet local code and VA’s Minimum Property Requirements. The certification should read as follows: “I certify that the construction exhibits for (identification of the property by house type, lot, block, subdivision name, etc.) meet all local code requirements and are in substantial conformity with VA Minimum Property Requirements, including the energy conservation standards of the 1992 Council of American Building Officials’ Model Energy Code and the requirement for lead-free water piping.”

 

If the inspections during construction are going to be made by the VA, then you and/or the builder will need to have two sets of the construction exhibits handy. If HUD inspects it then only one will be needed. Where possible, the VA recommends using reduced-size plans to save on costs. If the builder is getting a master appraisal done, they must also provide a plan that shows the locations of all the units or lots that are to be included in the appraisal, and a Building Program Statement, which includes information on what costs will be assumed by the purchaser. As a borrower, you should have access to the appraisal information, and you will know if it was a master appraisal or an individual appraisal. As far as information you need to be aware of goes, aside from whether the property passed the appraisal, you should also pay attention to the appraised value of the property, and any part of the construction exhibit that outlines an obligation for buyers of the properties.

 

If you are in an area with geological or soil instability and you are building your own home, then you need to make sure the builder provides a certification that any special geological hazard has been compensated for in the design of the home. Alternatively, evidence from a qualified geologist has no VA Inspection Approvalspecial geological danger or that the special danger has been rectified can be provided instead. To be qualified, a geologist must be State licensed or a member of a national or state organization that has sufficient experience, education, and ability in engineering geology. The VA has additional requirements if HUD is going to be performing the inspections during construction.

 

All the construction exhibits mentioned above, along with a certification that the exhibits submitted to HUD are identical to the ones submitted to the VA, a copy of the final HUD inspection signed by the HUD inspector, and documentation that shows that any incomplete work has been completed according to HUD requirements. If the house needs to be re-inspected, the veteran buyer cannot be charged the cost of it. In cases where there may be a difference in HUD interpretation of the VA’s Minimum Property Requirements, the VA field station has the option of imposing a VA inspection to go alongside the HUD inspections. Generally, the VA prefers to err on the side of caution.

 

VA Appraisal Eligibility and Proposed Construction

 

Deciphering the VA Lender’s Handbook Chapter 10 Part 8

VA Proposed Consturction

The last article was about getting a VA appraisal on new construction. New construction is not the same thing as proposed construction though people often mix them up. Do not confuse new construction with “existing construction” which means that the property has already had at least one occupant before you purchase it, or “proposed construction” which is a loan for the purpose of building a new home. Appraisals for proposed construction usually involve a builder more than a borrower, but if a borrower is wanting to get a loan to build a home, this information will also apply. The first thing to remember is that there are two types of proposed construction appraisals: individual, and master.

 

If you’re a borrower, you’ll almost certainly be getting an individual appraisal. Individual just means that only the appraisal on the home applies to only that home. This is opposed to a master appraisal, which is conducted for each house design and can apply to 5 or more homes that are built according to the same design. Master appraisals save time and money for builders and VA appraisers. When a VA appraiser writes up the Notice of Value from a master appraisal, all of the properties that it covers will be included on the same VA Master Certificate of Reasonable Value. What makes appraising proposed construction (or homes under construction) is that the appraiser can’t see the finished product the way he or she can on a normal appraisal.

 

To get around this limitation, the VA requires construction exhibits to be provided along with the request to appraise the construction, whether it is an individual appraisal or a master appraisal. If you’re a borrower having a house built, your builder should be able to take care of this though you may need to make sure he or she is aware of the requirement. If you are literally building your own house, chances are you have the skills and knowledge necessary to provide the construction exhibits, or you can hire someone to do it for you. In addition to appraising the construction exhibits, the VA also requires that the property be inspected at some point during the construction by either the VA or HUD.

 

The under-construction inspection is to make sure of a few different things. First, that the property is really being built according to construction exhibits provided to the VA, and that the property is meeting the VA’s Minimum Property Requirements for proposed construction. In some cases, a final inspection after completion of the property may be required. If the property is to be covered by a ten-year insured protection plan, or if the VA relied on local building authority inspections to be in lieu of official VA appraisals, then a final inspection will be required. The VA doesn’t mess around when it comes to taking care of veterans.

 

In order to pass the VA appraisal and be deemed fit for a veteran to purchase with a VA loan, the property must have a one-year VA builder’s warranty on it. This is only true for properties processed as proposed or under construction. If there were no 1st and 2nd-stage inspections done, and only a final one was conducted, the VA will also required a ten-year insured protection plan on the home. If the 1st and 2nd inspections were conducted by the local building authority or the VA, this requirement is waived. The Handbook also provides this helpful chart to show what types of warranties are required and when:

When the property is appraised as… …then…
existing construction no warranty is required
new construction either:1-year builder’s warranty is required or

a 10-year insured protection plan is required.

proposed or under construction with a full complement of VA inspections only a 1-year builder’s warranty is required
proposed or under construction (with only a final VA inspection and local inspections are accepted in lieu of VA first and second stage inspections per Section 14.03) only a 1-year builder’s warranty is required.
proposed or under construction (with only a final VA inspection and local inspections are not accepted in lieu of VA first and second stage inspections per Section 14.03) both a 1-year builder’s warranty, anda 10-year insured protection plan are required.

VA Appraisal Eligibility and New Construction

 

Deciphering the VA Lender’s Handbook Chapter 10 Part 7

 

The first step for this article is going to be defining our terms because it can get a little confusing. “New construction” means a property that has been fully completed prior to the veteran taking a VA loan out to purchase the home. In short, “new purchase” simply means that the veteran borrower will be the first occupant of the home, rather than buying it from the previous resident. The exceptions to the requirement that construction has been completed are things that are customer preference such as how the interior walls are to be finished, floor coverings, appliances, fixtures, and equipment and any improvements for which an escrow has been approved. Do not confuse new construction with “existing construction” which means that the property has already had at least one occupant before you purchase it, or “proposed construction” which is a loan for the purpose of building a new home.

VA Appraisal Warrantee

Since a new construction home is already completely built before you try to buy it, an appraisal is not required on the construction exhibits nor does the work on the construction need to be inspected during the work. If the VA sees fit, they may work with the builder to inspect and evaluate the work while construction is under way. This is done between the VA and the builder and no action is required of the borrower or the lender. To be eligible for a VA loan, a property that is appraised as a “new construction” must be covered by a warrant. There are two types of warranties the VA will accept:

1.  A one-year VA builder’s warranty,

2.  Or a ten-year insurance-backed protection plan.

 

If the builder offers the one-year VA builder’s warranty, the VA has some requirements which involve the borrower. First, the borrower has to provide a signed statement that essentially says the following: “I am aware that VA did not inspect this property during construction and that VA assistance with construction complaints will be limited to defects in equipment, material and workmanship reported in writing during the one-year VA builder’s warranty period.” In addition to your signed statement, the VA will also require the builder to fill out VA Form 26-1859, Warranty of Completion of Construction, so the VA has a clear record of the warranty. This helps protect you from builders being unwilling to uphold their warranty and gives you recourse if that happens. The thing to remember here is that if the builder provides the one-year VA builder’s warranty, it’s all fairly simple. If the builder provides the ten-year insurance-backed protection plan, it’s also fairly simple.

 

Normally, only two things need to be provided: a signed statement from you that is similar to the one above, but has some differences: “I am aware that VA did not inspect this property during construction and that it does not qualify for VA assistance with construction complaints.” and evidence from the builder that the property is enrolled in a ten-year insured plan acceptable to HUD. Things get complicated when the builder is only occasionally involved with VA financing and is not willing to offer either of those two warranty options. In cases like that, there are a number of things required to get the ball rolling. Some of them require direct involvement on your part as the borrower, and the rest are things that are good for you to be aware of.

Signature Agreement

First, you guessed it, a signed statement from you that says the following: “I am aware that this property does not qualify for VA assistance with construction complaints, since it was not inspected by VA during construction. I am also aware that this new property will not be covered by either a one-year VA builder’s warranty or a ten-year insured protection plan, as is normally required in this situation.” Next, the builder also provides a written certification that they don’t do VA financing very often and that they followed standard building practices and local building codes in constructing the building. Third, the lender needs to obtain a copy of all the documentation issued by the local building authority to verify that the construction on the property was inspected by them and found to be up to code in all regards. In areas where the building authority does not inspect new properties, the builder must make a signed statement acknowledging that.

 

Other VA Loan Appraisal Request Restrictions

 

Deciphering the VA Lender’s Handbook Chapter 10 Part 6

 

This article is supplementary to Chapter 10 Part 5 and Chapter 10 Part 4, in that those articles cover properties that are eligible for a VA appraisal and properties that are not eligible for VA appraisal. This article covers other situational variables that may prevent an appraisal from being performed on a property, even if the property is eligible for a VA appraisal. Your lender should be familiar with these restrictions, and should inform you if an appraisal is not required or available for the property you are hoping to purchase. However, you can save yourself time, effort, and even money if you can spot the red flags before the lender. Some of these things are going to be beyond notice, but being prepared for them is the best practice.

 

First, the VA does not allow duplicate appraisals. If a new appraisal is requested on a property that has already had a valid VA value determination made on it, it will be rejected. The reasoning of this should be fairly obvious, but it also helps save the veteran borrower money, since the veteran is the one who pays for the appraisals. If the property is being appraised as either “proposed or under construction” or “new construction”, the builder must provide a valid builder ID in order for a VA appraisal to be requested on the property. This builder ID demonstrates that the builder of the home is VA approved. For builders to maintain this ID number, they need to have filled out certain VA forms and have acceptable business practices. If a builder does not have this builder ID, then an appraisal request will not be granted.

 

Related to the builder having a valid builder ID, all of the parties must also be in good standing with the VA. More specifically, the Handbook provides the following clarification:

Duplicate VA Homes

A property is ineligible for VA appraisal if any party of interest to the transaction, other than the purchaser, is debarred Government-wide, or otherwise excluded from participation in the Loan Guaranty program due to a VA-imposed sanction.

 

The VA will impose a sanction on a party if they substantially prejudice against veterans or the government. Common ways they can do this is by failing to correct justified construction complaint items, violating the VA minimum property requirements, deviating from the building plans without VA approval, failing to honor their obligations in regards to houses previously built, or using a sales contract or marketing techniques that the VA considers to be unfair, unethical, or maliciously targeted towards veterans or the government. In the event that the sanctioned party is a builder, the restriction on the builder applies to all of the properties still owned by the builder. The VA will not grant exceptions even if a fee inspector approved the work on which the sanction was based, or the builder changes the company’s name or organization or becomes a principal or officer in another organization. Your lender will be aware of any builders on the sanctioned list, so you will not be accountable for that.

 

If there are building codes that apply to the home, evidence needs to be provided that the home meets those codes, or the notice of value from the appraisal will be conditioned on such evidence being provided. Also, at times when the VA is under a heavy workload, they may stipulate that only veterans who have signed a purchase agreement can make appraisal requests. This filters out those who are still not sure they are going to purchase the property being appraised. Also, VA builders will also like to know that their request for a “master” appraisal for all of the units in a development may be denied if the local VA office is under a heavy workload and the VA has reason to believe that only a minority of the units in the development will be financed with VA loans. If the home is in an area where there is no qualified VA or HUD fee inspector, the property cannot be appraised until it qualifies as a new construction or existing construction. Since many VA lenders are not willing to finance construction loans anyway, this does not come up very often.

 

Types of Property Eligible for VA Appraisal Part 2

 

Deciphering the VA Lender’s Handbook Chapter 10 Part 4

 

In the last article, we began talking about the types of property that are eligible for the VA appraisal. It is best to read that article (Part 1) before reading this article. In that article we cover the various types of housing that are eligible for the VA appraisal, while in this article we’re going to focus more on housing in specific circumstances that make it either eligible or ineligible to be appraised. First, we’ll talk about properties that are going to be altered, improved, or repaired. This can happen in a refinance situation. Second, we’re going to talk about appraisals that happen for a property that is already securing a VA loan. This usually means a refinance.

 

VA Appraisal ApprovedSo, the VA can approve and guaranty loans for the purpose of altering, improving, or repairing a property that is already owned and occupied by the veteran. The appraisal can happen at one of two times: before the work has been started on the home, and after the work has been completed. Generally, if the appraisal takes place before the work (which is the best time to do it if you can), the appraiser will make a determination based off of the construction exhibits and the plans for the alterations, improvements, or repairs. All work that is done must be inspected to the extent that the VA determines, and this determination is done on a case-by-case basis. If the appraisal happens after the work is done, it is conducted much like a normal appraisal. If the work is completed before the appraisal, usually no construction exhibits are required as the appraiser can see the actual changes made quite clearly.

 

The Handbook specifies three reasons why a property that is currently securing a VA loan might be eligible for an appraisal:

  1. The property is being refinanced, a partial release of security, or foreclosure on the home. If it is a cash-out refinance, an appraisal is required, as the value of the home must be determined in order for the lender to know how much equity the borrower has in the home. If it is just an interest rate reduction refinance, then an appraisal is not required.
  2. However, if the new loan balance will exceed the original loan by 5% or more, the lender may wish to request an appraisal, and is allowed to do so. In the case of a partial release of security, an appraisal will be required unless there is sufficient information already available for the VA to determine the reasonable value of the property and the value of the security remaining.
  3. The last reason a property currently securing a VA loan might need a refinance is in a case of foreclosure.

Now, as a borrower, if an appraisal is needed, in this case, you won’t have anything to do with it because you will no longer be in the home. In this case, the lender won’t usually request an appraisal until there is an interested buyer of the home. The lender does, however, have to make sure that the appraisal takes place no later than 30 days prior to the estimated sale date of the home. The lender is responsible for helping the appraiser get access to the interior of the home, so you shouldn’t need to be involved in any way.

 

Obviously, in the event of a foreclosure, the last thing on your mind is going to be when the lender gets an appraisal on the home. Foreclosure is an awful thing to experience, and so every time we talk about foreclosure, we try to throw in some tips to help you avoid it even when your finances are in trouble. There are a lot of things you can do to help bail yourself out if you’ve lost your job, had your hours or salary cut, or had an unexpected emergency expense. Here are some things you should do:

  • get a job ASAP: this may seem obvious, but what we mean is any job. Working minimum wage at McDonald’s is better than nothing, and can be what makes the difference while you’re between jobs in your industry.
  • Keep your lender informed: when something financially bad happens, after family, the first person who should know about it is your lender. If you are talking to your lender two months before you will miss a payment, he or she has a lot more things they can do for you than if they don’t know you’re in trouble until you’ve missed a payment.
  • Be smart with money now: keep your credit card debt under control and pay more than the minimum on your mortgage. One of the ways to avoid foreclosure is to consolidate your debt into your mortgage. Your interest rate on your mortgage is almost certainly lower than your interest rate on your credit cards. If you’re ahead of the amortization schedule, your lender can play with the monthly payment until the amortization schedule has caught back up.

Types of Property Eligible for VA Appraisal Part 1

 

Deciphering the VA Lender’s Handbook Chapter 10 Part 3

 

Appraisals for PropertiesA property being eligible for a VA loan and being eligible for a VA appraisal are two different things though they are closely related. The VA appraisal is what determines whether a property will be eligible for a VA loan. There are some types of purchases that are not eligible for a VA guaranty irrespective of the appraisal, such as mobile homes or RVs, but even eligible property types have to pass the VA appraisal test. This article is going to focus on whether properties are eligible for the appraisal, and we will not discuss the property requirements for a home to be eligible for the VA guaranty. It is ultimately the lender’s responsibility to determine whether the property is eligible for a VA appraisal, and if the lender makes a claim on a home that was not eligible for the appraisal, the VA may deny or reduce the payment on the claim.

 

Any existing construction is eligible for the appraisal. In other words, a home that has been previously occupied or has had all the onsite and offsite improvements completed for at least a year is eligible. Newly constructed properties are eligible for an appraisal if they are covered by a one-year VA builder’s warranty, are enrolled in a HUD-accepted ten-year insured protection plan, or built by the veteran, as the general contractor, for his/her own occupancy. Exceptions to this can be made if a veteran is purchasing a new home from a builder who is “…not more than occasionally involved with VA financing…” and does not offer a VA builder’s warranty or at ten-year insured protection plan. You may wonder how new constructions are appraised. It all depends on timing.

 

Above we talked about homes that have recently been completed and have not had a previous occupant. Now we’ll talk about proposed construction loans or properties still under construction. These properties are eligible for the VA guaranty if the appraisal is based on the proposed construction exhibits, and the property is inspected by either the VA or HUD during construction. In these cases, since it’s not practical for the VA to wait until the home is finished to appraise it (imagine having the VA refuse to guarantee your loan after you’ve built a house for it), the VA makes sure that the plans are up to snuff, then checks up during the construction process to make sure that the work is sufficient quality.

 

Manufactured homes that are classified as real estate are eligible for VA appraisal under certain conditions. The first is that the home is both classified and taxed as real property. Second, that the home is properly affixed to a permanent foundation. Third, the property must substantially conform with the VA’s minimum property requirements, and it must also conform with applicable building code and zoning requirements for real estate. In other words, aside from the way the home was made, there must be no practical difference between a manufactured home and a normal property. However, other manufactured homes can be eligible for the appraisal if they (shocker) meet certain conditions.

Home Appraisals

These types of manufactured homes are often referred to as ‘modular homes’, and are eligible for the appraisal, as long as they are covered by a HUD structural engineering bulletin, or meet state building standards and have the state’s approval certification. Modular homes are delivered to the building site in sections but are not attached or affixed to a chassis supported by wheels. This is different from mobile homes. Mobile homes are generally not eligible for the VA appraisal because they are attached to a chassis with wheels. The nature of mobile homes makes it nearly impossible for them to achieve the minimum property requirements that the VA has for properties being financed with a VA loan. Those minimum property requirements establish a certain quality of life that is often not obtained by a mobile home.

 

In the next article we’ll talk about properties that are going to be altered, improved, or repaired, properties that are already securing a VA loan (for instance: refinancing), and we’ll cover the types of properties that are not eligible for a VA appraisal.

 

The What, Why, and Who (then more ‘what’) of the VA Appraisal

 

Deciphering the VA Lender’s Handbook Chapter 10 Part 1

VA Appraisal Process

Chances are you’ve heard of the VA appraisal, and you may have heard some horror stories associated with it. Truth be told, the appraisal is one of the toughest things about the VA loan program. With any loan type, the home is going to need to be inspected and appraised prior to the sale just to determine the reasonable value of the home. The VA appraisal is much like that inspection, in that its primary purpose is to determine the fair value of the home, but the appraisal must also determine that the property being purchased meets the VA’s minimum property standards and will meet the needs of the veteran purchasing the home. A home purchase can be shot down by the VA appraisal if it doesn’t appraise for at least as much as the sale price, or if the property does not meet the minimum property requirements. Most of the horror stories out there have to do with one of those situations.

 

With a VA appraisal, the ‘what’ and the ‘why’ are intermarried. In other words, it’s fairly easy to understand why the VA appraisal is required just by learning what the VA appraisal is. The VA wants to make sure that the property has a value as high as the loan amount, and that the property is in acceptable condition. On a deeper level, the purpose of the VA loan program is to help veterans obtain suitable housing at better terms than they could otherwise find, and to raise the veteran’s quality of life above what it could have been without it. Much like those in the medical profession will recognize the rule: “first do no harm”, the VA doesn’t want their VA loan program to enable a veteran to get an unaffordable or unfair loan or to purchase a home that they’ll be stuck in even though it’s not meeting their needs.

 

Now to the ‘who’. First, who is allowed to request an official VA appraisal? The VA prefers that the lender be the one to request the appraisal, though it can be requested by any other party involved in the transaction. However, whoever requests the VA appraisal must be aware of the requirements that the VA has for the appraisal request and how to submit one. As for who can perform the appraisal, only a licensed VA appraiser can perform the appraisal. Other home inspectors are welcome to perform an inspection on the home if desired, but their inspection will not be accepted in lieu of the official VA appraisal.

 

TAS (The Appraisal System) is the online portal that those requesting VA appraisals can use any time of the day or night to immediately get a case number and appraiser assigned. If you would like to be the one to request the appraisal, get the web address for TAS from your lender. There are on-screen instructions that will walk you through the process, and the following article will also have specific instructions for the entire process of requesting an appraisal from start to finish. If you have User ID or password problems, you can contact the regional VA office over the property, and if you have any technical issues, you can contact the VA Help Desk. Your lender can provide you this number if it comes up. If you don’t have access to the internet or are unable to resolve a problem you’re having with TAS, you can also request the appraisal via telephone, fax, or in writing. The VA prefers to use the online portal, however, so if you can use it, you should.

 

By and large, it’s usually best to have the lender request the appraisal. They have the most experience working with the VA and requesting appraisals, know what is expected of them, and are generally able to make the process go more smoothly than a first-time requester. However, if you are in a situation where it will be better for someone other than the lender to request the appraisal, you do have the ability to do so. Work directly with your loan officer on any situation-specific circumstances.

 

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