Before your home can be approved for Idaho VA loan financing, a VA appraisal must be completed on the property.
An Idaho VA appraisal involves a thorough inspection of the home and property to determine the current market value of the home. This appraisal is especially geared towards reporting any defects involving safety or security of the home.
So, how does this fit into the VA loan process?
Simply put, even though the VA’s primary focus in assist veterans in financing a home, the VA must also take precautions to protect the investments of both the borrower and the VA itself with a good appraisal.
Let’s say that a veteran or member of the military found a house that he wanted to purchase for $100,000. The house seems to be exactly what he’s looking for; single story, pool in the backyard, freshly painted, and located on 4 acres of land out in the countryside.
He decides that he wants to use his use his hard-earned military benefits to get a zero money down VA loan. In other words, if approved, he’ll receive a fully financed $100,000 VA loan.
As part of the standard Idaho VA loan approval process, a VA-appointed appraiser goes to the property to do an appraisal of the actual worth. Unfortunately, the appraiser discovers that the house needs a new roof, there are cracks in the pool cement, and there are severe irrigation issues throughout the property that need to be fixed, among other miscellaneous flaws.
Tallied up, the appraiser determines the value of the home and property to be $75,000 instead of $100,000.
Because of the large difference between what the seller is asking for and the actual value of the property, the VA ultimately turns down the loan.
Of course, this is a somewhat extreme example, but you get the idea. The VA needs to verify that the actual value of the home and property is close to what a potential borrower wants to pay for it. Neither a mortgage bank nor the VA want to insure homes that are worth less than the loan amount.
Here is a list of things to consider when shopping for a new home:
- The appraiser needs to inspect both the inside and the outside of the house. If the house in question is being constructed, the appraiser still needs to analyze the property and construction site.
- The official appraisal report will contain a list of “observable repairs that need to be completed.”
- This report will also contain a list of “customer preference items to be installed.”
- A few small issues with the property won’t immediately disqualify it, but a lot of small issues or a few big issues may.
Other Common Idaho VA Mortgage Questions:
Primary Benefits of an Idaho VA Home Loan:
- 100% financing
- No monthly private mortgage insurance is required
- There is a limitation on buyers closing costs
- The loan is assumable, subject to VA approval of the assumer’s credit
- 30 year fixed loan
- Seller can pay up to 4% of the veterans closing costs and even pay down your debt to help lower your debt-to-income ratio
- Interest rates are similar to FHA rates
- You don’t need perfect credit
Who is Eligible for a VA Home Loan?
Veterans with active duty service, that was not dishonorable, during World War II and later periods, are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service.
Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days of active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.
If you have any questions about purchasing or refinancing a home with an Idaho VA loan please feel free to contact me.