Appraisals are a necessary and significant term for mortgage lenders when it comes to lending money to purchase a particular property. It is a type of inspection that the lender orders to determine the property’s market value and help protect their investment. However, irrespective of the terms looking alike and their meaning being similar, there is a thin line difference between a VA appraisal and a VA inspection. The former is a mandatory process, while the latter is optional.
In this blog we will learn more about this optional yet most recommended option while undergoing a VA loan.
Let’s get started!
Brief About VA Appraisal Vs. VA Inspection
VA appraisal
The lender orders the VA appraisal to determine the property’s market value. It is a mandatory part of the VA loan process and is used to protect the lender’s investment. The appraiser will visit the property, measure it, take pictures, and compile a report that includes their findings. As a result, they will assure the home’s fair market value, safety, and soundness.
VA inspection
The VA inspection is an optional part of the VA loan process but is highly recommended. The purpose of the inspection is to ensure that the property meets VA requirements and is in livable condition.
The Missouri mortgage lenders undergo this appraisal process to ensure that they are investing rightly. They need to know whether it is worth lending money and make sure that they will get it back.
The home appraisal focuses on the home’s value, while the home inspection focuses on the property’s condition. Therefore, the appraiser has only to do with the market value, and the inspector checks if all the systems in the home are in proper working condition and if there is anything that needs to be fixed. The appraiser also looks at comparable properties in the area to develop a market value for the home being appraised.
What Inspections are required for VA loans?
Though inspection is not required for VA loans, it is most recommended. The lender has the authority to order an inspection on any property they are interested in. This inspection will ensure that the property is safe and up to code before lending money to the buyer. In addition, mortgage companies conduct the appraisal process as a part of the lending norm. It is one of the forms of inspection. Though it is not an in-depth process, the lender wants to ensure that the property is worth lending money to.
VA Appraisals Vs. Conventional Appraisals
There is always a misconception that VA appraisals are quite strict or worse than conventional appraisals. However, this is not the case. VA appraisers are trained to follow the same procedures and standards as their counterparts in the conventional market. The only real difference is that VA appraisals are ordered by the lender and not by the home buyer.
Both VA and conventional appraisals share a common objective: to find the market value of a property. The main difference is that VA appraisals are mandatory while conventional appraisals are not.
In What Way the VA Appraisal and the Conventional Appraisal are Carried Out
The appraiser compares the subject property with the recent sales of the same or similar product in the recent market. The appraiser will also inspect, measure, and photograph the property. The inspection is to make sure that it meets HUDs Minimum Property Standards. Finally, the appraiser will compare the core subject property with three sales.
On the other hand, the conventional appraisal is not ordered by the lender but by the home buyer. They order it because they want to know what their house is worth. The appraiser will conduct a drive-by inspection and look for any obvious damage to the property. They will also research recent sales of similar properties in the area.
What are the minimum Property Standards that a property must meet to be eligible for a VA loan?
The Department of Housing and Urban Development (HUD) has published a set of Minimum Property Standards, which all properties must meet to be eligible for a VA home loan. These standards cover health and safety, habitability, and energy efficiency.
The inspection ensures that the property meets HUDs Minimum Property Standards. If the appraiser finds that the property does not meet these standards, the buyer may be unable to get a Missouri VA loan. In some cases, the seller may be able to make repairs so that the property meets standards, but this is not always possible.
Space Requirements
The home needs to be spacious enough for your family to live in. This includes adequate living, dining, bedroom, and storage space. The house need not be large enough, but it should be sufficient for your needs.
Structural Soundness
The property must be structurally sound and free of any significant defects. This includes roofing, framing, siding, windows, and doors.
Plumbing
All plumbing must be in proper working condition and up to code. This includes fixtures, drains, water heaters, and septic systems. In addition, there must be a supply of hot water and the sanitary disposal of wastewater.
Access And Encroachments
All properties must have accessible parking and adequate storage space. The property must also not infringe on any easements or encroach on neighboring property.
Electrical
All electrical wiring and fixtures must be up to code and properly working. This includes outlets, switches, smoke detectors, and carbon monoxide detectors.
Key Takeaways
Lastly, when considering a VA loan, keep in mind that the property must meet HUDs Minimum Property Standards. If it doesn’t, you may not be able to get the loan. However, in some cases, the seller can make repairs so that the property meets standards set by HUD. Asking your lender about the Minimum Property Standards will help ensure that the property you are interested in is eligible for a VA loan.
For further assistance, contact your reliable mortgage lenders near me in Missouri so that you can be pointed in the right direction to make your loan process easy.
