Although a VA loan does not require a home inspection, it’s essential to recognize the advantages of conducting a comprehensive property assessment. Therefore, it is strongly advisable to carefully consider the benefits of opting for such an inspection.
As is customary with VA loans, your mortgage lender will conduct a house assessment to ascertain the property’s market worth and overall condition. However, it’s essential to recognize that a home appraisal differs significantly from a comprehensive home inspection – they are two different things.
This article will discuss the difference between inspections and appraisals and what you’ll need when using a VA loan to buy a house.
Overview of VA Loans and Home Inspections
To get everyone on the same page, let’s start with a few simple definitions:
Simply put, a VA loan is a home loan that is supported by the U.S. Department of Veterans Affairs. Borrowers are not given money directly by the VA. Instead, they provide mortgage lenders an added layer of protection against borrower default. VA loans offer several benefits, including 100% financing and flexible criteria.
The program is limited to military members, veterans, and certain qualifying spouses. This becomes especially significant in real estate markets grappling with a shortage of inventory, where access to such financing options can be instrumental for eligible individuals.
A home inspection provides purchasers with more information about the actual state of the property through a limited, non-invasive home examination. They are conducted by professional home inspectors who are certified to perform such inspections. The inspector will review many aspects of the property, including the roof, foundation, and electrical system, and deliver a detailed report of findings to the buyer.
Some buyers who use VA-guaranteed mortgage loans choose to have the home inspected before purchasing, while others skip it entirely. But considering how much you’ll be paying for the home, you might see the value of a thorough property inspection.
This can help you avoid costly surprises and make a more informed decision, aligning with your goal of effectively understanding how to save money to buy a house.
The Appraiser Looks for ‘Readily Apparent Repairs’
While the Department of Veterans Affairs does not require a home inspection for VA loans, they require an appraisal. These are two different procedures entirely, though some borrowers get confused.
Here’s the difference between them:
- Inspection: The primary purpose of the home inspection is to identify potential issues, defects, or safety concerns within the home. The inspection focuses on structural integrity, electrical systems, plumbing, HVAC, roofing, and more. It helps the buyer understand the property’s condition before finalizing the purchase. While a VA loan doesn’t necessitate an inspection, opting for one can significantly enhance the buyer’s peace of mind.
- Appraisal: A house appraisal’s main goal is to ascertain the property’s current market worth. The appraiser does this by examining the property’s dimensions, state, location, and recent nearby comparable transactions. A home appraisal is required for any property that is purchased with a VA mortgage loan.
There’s a key difference between the appraisals for conventional mortgage loans and VA loans.
With a conventional appraisal, the main focus is on determining the fair market value of the property. But when a VA loan is being used, the appraiser will also ensure that the property meets the VA’s Minimum Property Requirements (MPRs) and is safe, sound, and sanitary for the occupant.
Here’s how the Department of Veterans Affairs explains it on their website:
“While VA-assigned fee appraisers must note any readily apparent repairs that are needed. It is important to distinguish the differences between a real estate appraisal and a home inspection report. The fee appraiser will not perform operational checks of mechanical systems or appliances. The fee appraiser estimates the value of the property to ensure that it is sufficient for the amount of the proposed loan.”
How Buyers Can Benefit from a Full Inspection
As a buyer, you’ll have to decide whether or not you want to have the property inspected. You’ll also have to find an inspector, schedule the inspection, and pay for it at the time it’s completed.
While they’re not required for VA loans, home inspections do offer a lot of benefits for home buyers. This process can help you understand the true condition of the property prior to purchasing it. To ensure a thorough evaluation, you can consider consulting a VA home inspection checklist as a helpful resource.
Here’s a more detailed list of benefits:
- Avoiding Major Problems: A home inspection can help you identify any major problems with the home, such as structural damage, water damage, or mold. This could help you avoid buying a home that will require costly repairs.
- Gaining Peace of Mind: Knowing that you’ve had a thorough inspection can give you peace of mind that you are buying a home in good condition. This is particularly crucial if you’re purchasing your first home or don’t have the money to pay for repairs.
- Negotiating the Price: You might be able to bargain with the seller for a reduced purchasing price if the house inspection discovers any significant issues. In certain circumstances, sellers can choose to lower the sale price rather than make repairs to the house. This is a factor that is especially important in markets when there is an inventory deficit.
- Budgeting for Repairs: Even if there are no significant issues found during the house inspection, it might still point up possible repairs that need to be addressed. This can assist you in creating a budget for further repairs and upkeep.
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Six Things to Take Away from This Article
We’ve covered a lot of important information in this article. So, let’s wrap up with a summary of the key takeaway points:
- Home inspections are optional for buyers who use VA loans.
- However, the home will have to be appraised by an approved appraiser.
- The appraiser will ascertain the home’s current market worth.
- The appraiser will also ensure that the home is safe and habitable.
- Although not necessary for a VA loan, a home inspection has several advantages.
- You’ll have a better understanding of the property’s genuine condition after an examination.
We hope this information helps you make an informed decision regarding home inspections. We wish you well in your journey to homeownership!
Moreover, for those interested in real estate investment beyond traditional property purchase, understanding how to invest in real estate without buying property may open up additional opportunities in the field.