VA Energy Efficient Mortgages are popular among service members and veterans who are interested in reducing their carbon footprint. While reducing one’s carbon footprint is an important consideration for many, the financial benefits of installing solar panels or making other energy-efficient improvements often outweigh any environmental benefits.
The VA Energy Efficient Mortgage (EEM) program allows eligible borrowers to finance the installation of energy-saving features in their homes using their VA Home Loan.
Is a Home Inspection Necessary for a VA Loan?
There is no need for a home inspection with a loan from the Department of Veterans Affairs (VA). The lender may insist that you get them, but doing so is not required. In this regard, VA loans are comparable to FHA loans, conventional mortgages, and the vast majority of other home lending programs. To guarantee the property fulfills the VA’s minimum property criteria (MPRs) and to establish its worth for lending reasons, an appraisal is necessary for a VA loan.
Some may mistake a VA appraisal for an inspection because it evaluates whether or not specific conditions (in place to safeguard veterans from acquiring defective properties) are met.
VA Appraisal Vs. Home Inspection
Fair market value is the primary focus of a VA evaluation. Lenders will look at this figure to make sure you’re not spending more than you should for the house. They utilize it to verify that there is sufficient value in the home to cover the loan in the event of a default.
But the VA evaluation is also used in other contexts.
The VA appraiser must ensure the property meets health and safety standards. In other words, the house is move-in ready and won’t be a financial or health risk for the veteran. The appraiser’s job is to make sure the house isn’t a money hole that will put you further in debt and that it satisfies the VA’s minimal property criteria.
However, a VA appraisal should not be used in place of a thorough house inspection because of its significant restrictions. The appraiser looks at the house’s “surface” features, whereas the inspector investigates every crevice to discover any problems that exist or might arise in the future.
VA Appraisals Vs. Conventional Appraisals
Veterans Affairs assessments are not “stricter” or “worse” than regular appraisals, contrary to popular belief. They have many characteristics and, in reality, aren’t that unlike from one another.
Similarities:
The purpose of a VA appraisal, as well as a normal appraisal, is to determine the property’s true market worth. The appraiser goes to the house, measures it, inspects it, and takes photographs.
Both forms of appraisals involve an examination of the subject property in relation to three surrounding homes that have recently sold. The appraiser uses this method to determine the property’s true market value.
Appraisers for both VA and conventional loans are on the lookout for severe defects and value-adding renovations. A major hole in the roof, for instance, would lower the evaluation, but a larger kitchen with high-end appliances would raise it.
Lenders typically request third-party appraisals, but buyers foot the bill.z
Differences:
The minimum property standards (MPRs) for a VA appraisal are lower than those for a standard assessment. Although prospective purchasers could be put off by lenders’ minimum property standards and worry that this would delay their loan application, loan rejections are really rather uncommon. Whenever these occur, buyers should breathe a sigh of relief since they have avoided purchasing an overpriced house or one with serious structural flaws.
Sellers should not be concerned with MPRs if they have maintained the property well and the appraiser identifies minor faults that are readily resolved.
VA Minimum Property Requirements (MPRs)
The MPRs are set by the Veterans Affairs Department of the United States. The goal is to make the premises as secure and sanitary as possible.
What you need to know about the best MPRs is included below.
There should be adequate room for your family in every home. Included in this are sufficient kitchen and eating facilities, living quarters, bedrooms, and bathrooms. The VA just requires that the house be adequate in size for the purposes of the family.
There must be a public road that provides year-round access to each property, and any private roads must be permanently eased and maintained by the HOA. The land can’t be too close to someone else’s, either. A garage, utility easement, or any other structure on the land is included in this definition.
There can be no signs of flooding, sinkholes, or other environmental risks on the land. Asbestos, lead paint, and radon gas are all examples of such substances. According to the MPRs, anything that might compromise the safety of the occupants or the integrity of the building itself is considered a danger.
Water for drinking, bathing, and other hygienic purposes must be available on the site year-round. Each member of the household need access to clean, hot water and proper sanitation. Sewage disposal on the site must be handled efficiently and safely.
The electricity, gas, and HVAC in every home must be in good operating order. Ensure that your home’s electrical and gas systems are in excellent operating order. In the winter, the heating system must be efficient enough to warm the entire house, and in the summer, the air conditioning system must effectively remove excess heat from the inside.
The home’s building components must be in good condition, with a roof that has at least three years of life left on it, and pest- and mildew-free crawl spaces, basements, and attics.
The roof must keep the house dry and not require any rapid repairs. Crawl spaces, basements, and attics should all be easily accessible, clean, and well-ventilated.
The appraiser must make a note of any deficiencies that compromise the home’s structural integrity, such as termite damage, insect infestation, dry rot, etc. The appraiser’s job is to check for anything that might compromise the home’s structural integrity or put the residents in danger.
Water must flow away from the house and the foundation, and there must be no low spots. The appraiser is obligated to note any drainage problems present on the property.
VA loans can be used even if a home has a pool, but only if the pool is in excellent operating shape. If the appraiser discovers anything that might prevent the pool from meeting the MPRs, they are obligated to report it. The value of a property might include a swimming pool if it meets local building codes.
What To Do About Problems With The VA Appraisal
Appraisals don’t always work out, and when they don’t, it can delay or even kill your loan approval. If that occurs, follow these steps.
The Property Doesn't Meet the Bare Minimum Standards:
There are several choices available if the house does not fulfill the MPRs. If there are problems with the financing or closing of the loan, you can ask the seller to remedy them. The home is not in compliance with VA standards for safety and soundness, thus the transaction can be canceled. Alternately, you can ask for a waiver of the MPR, provided that it doesn’t compromise the home’s habitability or safety in any way and is granted by the VA and the lender.
The Estimated Price Is Too Lowz:
The evaluated value may fall short of the purchase price you were expecting to spend. There are several paths you may take here. Since taking out a VA loan for more than the property is worth would put you in the negative equity position, you have the following options:
Make a request for a price reduction from the seller.
Some vendors will reduce their asking price to reflect the true value of their home. They may continue with their plans without worrying about losing the sale. You can proceed with the purchase if the vendor agrees to reduce the price.
Pay The Difference:
You can pay the difference between the assessed value and the sales price (the “appraisal gap”) in cash if the seller refuses to negotiate a lower price. Remember that this is in addition to your down payment (which is optional with VA loans). It’s important to remember that if you put more money into a house than it’s worth, you won’t have any equity in it.
Turn Down The Offer:
Since you are unable to secure financing in an amount greater than the assessed value, you have the right to back out of the deal. Avoid overpaying for a property and protect your earnest money by include an appraisal or finance contingency in your purchase agreement.
Common Reasons Homes Fail The VA Loan Appraisal
Although there are several procedures involved in obtaining a VA loan, some veterans find the appraisal process to be the most trying.
Before the VA can guarantee a loan, the borrower must meet certain Minimum Property Requirements. In order to protect the well-being of service members and their families, MPRs have been established covering a wide variety of issues.
Homes must be “move-in ready” for the VA to purchase them. In reality, the loan cannot complete until all key repairs and health and safety concerns have been addressed.
Right off the bat, a VA assessment may run into serious difficulties due to a few key concerns. Here are examples of five of the most frequent.
1. Not Enough Heat:
Inadequate heating systems will exclude a home from the VA assessment process. An authorized dwelling has to have a reliable and appropriate heating system that can keep its occupants warm and cozy.
To compensate for the lower heat output of a wood fire, a supplemental heating system capable of keeping the plumbing room at a constant 50 degrees is required in such homes.
2. Weak Electricity Infrastructure:
It seems to reason that a house has to have operational power before it can be called move-in ready. Homes with enough lighting and the necessary appliances will receive higher marks from appraisers.
3. Broken and leaky roof:
The roof will be inspected by VA appraisers to ensure there are no leaks or other deficiencies that might be caused by holes in the roof. If these issues aren’t addressed, they may have a significant negative effect on a home’s value and put purchasers in a tough spot as the house ages and the problems compound.
4. Cracked Glass Causes Contractual Problems:
A shattered window is perhaps the least of the concerns for service members who are trying to purchase a home. VA evaluators, however, disagree.
All broken windows must be fixed since they increase the heating expense and lower the home’s curb appeal.
5. Issues with Pest and Termite Management:
As termites can disqualify a property from eligibility in the VA loan program, sellers must obtain a section one termite clearance prior to acceptance. In addition, if appraisers notice any signs of dry rot or fungal development, they must disclose it.
There is much optimism in light of all this. Having a reliable real estate agent on your side might make all the difference.
When determining a home’s value, the VA uses a set of regulations and guidelines that are both binding and unyielding. Brokers and vendors who have been treated unfairly in the past view the procedure as harsh and capricious. These restrictions, however, serve an important purpose.
Veterans’ and their families’ well-being is the primary concern of this initiative. The VA won’t back a loan on a house with serious flaws that put the occupants’ lives in danger.
Veterans can benefit greatly from the assistance of agents who are familiar with the VA’s procedure and process.
Frequently Asked Questions
A VA home appraisal is required regardless of whether a VA loan requires a home inspection. This specialized assessment won’t tell you everything an inspection would, but it will tell you if the house is secure, sound, and clean enough to qualify for VA financing.
There is always a need for a VA appraisal. No VA loan program mandates a home inspection, but you should always do one. The residence and its features will be examined in great detail by the inspector. You will know precisely what you are purchasing, any potential problems, and any concerns that require immediate attention.
Borrowers should always get a house inspection before finalizing a purchase agreement. Kick off the house inspection process so you can decide early on if you want to continue with the purchase.
To answer your question, yes. It’s recommended that you set aside at least $600.
Although the average closing timetable is 10 days, it’s always wise to provide some wiggle room. When demand is high, production times may lengthen.