While applying for a VA home loan is a financing option if you're a veteran, surviving spouse, active duty service member, reservist, or member of an active duty National Guard unit, a property's valuation is a key factor when it comes to getting approved for a loan.
The VA appraisal is an essential step in the loan application process, as it determines whether your loan will move forward without complications:
About VA Appraisals
- You must go through the VA home appraisal process to receive a VA home loan. Like buyers applying for conventional mortgage loans, banks and mortgage companies that give home loans guaranteed by the U.S. Department of Veterans Affairs need to know how much a home is worth. A lender looks to see that a home's purchase price doesn't exceed its reasonable value.
- You are responsible for paying the cost of the VA appraisal unless the seller agrees to pay the appraisal fee. Appraisal fees vary by state and the type of home you are purchasing.
- The property must meet the VA's minimum property requirements (MPRs). Although it's not the same thing as a home inspection, the VA appraisal looks at the general condition of the property to ensure that the home you're buying is structurally sound, free of safety hazards, and has a safe drinking water supply and effective sewage disposal system. Basically, the home needs to be liveable and in move-in condition.
Failure to Meet MPR Guidelines
If the VA appraiser determines the home needs certain repairs to meet MPR guidelines, you can ask the seller to make the repairs as a contingency of the sales contract. You may also choose to walk away from the deal if the seller refuses to make the necessary repairs, and you don't want the expense of bringing the property up to the VA's minimum standards.
If the property appraises for less than the amount of the loan you asked for, but you still want to buy the home, you have several choices. You can pay the difference between the purchase price and appraised value out of your own pocket, ask the seller to lower the sale price, or petition the VA for a Reconsideration of Value (ROV).
To challenge a low VA appraisal value, you must submit a written ROV request to the lender along with a comparative market analysis (CMA) and additional comparable sales that support your request for a higher appraisal value. While providing a CMA and comps is optional, the appraiser can only use completed property sales as comps.
If you request an increase in the appraisal estimate of less than 10 percent, the lender will forward your appeal to the VA assigned appraiser. Based on the information you provide, the appraiser will either increase the appraisal value or stand by the original estimate.
If you request an increase of 10 percent or more in the home's appraised value, the lender will forward your appeal directly to the VA for a decision. To learn more, contact a company like Appraisal Office Aspen Ltd with any questions or concerns you have.