A VA loan appraisal determines the value of the property your are seeking a loan for. To understand the process, you must first understand how the loan guaranty works. The VA does not issue your loan directly. Instead, you will secure a loan from a private lender, and the VA will insure the loan up to a given amount, making it cheaper for you in addition to other benefits. Before the VA can approve the guaranty on a loan on any given property, though, it must appraise the property to ensure the assessed value is accurate.
Why Do I Need a VA Loan Appraisal?
If you default on your mortgage, the VA will have to purchase the loan out of default from the lender. The VA will then foreclose on your home, taking the asset from you. The asset will be liquidated in order to cover any losses on the loan. This works for the VA as long as the home is worth enough money to cover the loan balance. To assure the value is there, the VA conducts an appraisal directly prior to guaranteeing your loan.
Who Orders the Appraisal?
Your loan officer will order your appraisal. The loan officer only needs to go through a few steps online and perhaps a few additional details to cover regulations in your state. Your VA loan officer will be very familiar with the process, and the process should move forward without delays.
Who Conducts the Appraisal?
The VA has certified home appraisers that carryout the inspections and appraisals. These individuals do not work for the VA directly, but they have been approved based on their business practices to carry out the investigations. The VA similarly certifies builders and lenders, so it is wise to look for individuals who have the VA's stamp of approval before selecting the businesses you will work with. This can cut back on the red tape you may see in the future if you work with non-approved businesses.
What Happens During an Appraisal?
During an appraisal, the inspector will check the major elements that bring value to the property. For example, the plumbing or septic system must be in good working order, the roof should be in good repair, water heaters, electricity and insulation should be up to code and even small elements like the sidewalk or driveway should be in good order.However, the most important aspect of the appraisal report is the value of the home when compared to other similar homes in the area. If any of the big ticket items are not in good working order, or the value of the home is not line with the neighboring homes, the house may not be approved for the VA home loan.
What is My Role in an Appraisal?
It is a good idea to build terms into your contract that make any offer subject to completion of your VA home loan guaranty. This means you will not be on the hook for the offer if your guaranty does not come through. Be sure to request this condition with your real estate agent.