Hey everybody, it’s Jimmy Vercellino and today I’m going to talk about a question that I tend to get more often than not, and that is simply this, Jimmy, why do I need an appraisal to purchase a home with a VA loan? After all, isn’t VA lending the money? They should just approve everything, et cetera. No, that’s not how it works.
Okay, so let me just say this really quick here. I don’t know why I did that with my hands. Maybe it’s me pleading to help Veterans understand this. Remember Vets, that the VA does not lend the money. All they do is guarantee it. So we, as the mortgage lender, are the ones that are actually responsible for helping you purchase the home. In other words, we’re lending the money. So if the lender is lending the money, well you’re darn right we want to make sure that the collateral that we have is going to appraise for what we’re lending on it. You with me on that? Does that make sense? And that’s really all it is. So what happens is once you get under contract right, the Appraiser is going to go out to the property and they’re going to inspect it. Now, really quick point of clarification that I might put here.
The appraise is not an employee of the VA. In other words, Joe down at the VA doesn’t hop in his truck and go and inspect the property. That’s not how it works. A lot of people think that, by the way. But what happens is, is the VA appraise is a contracted appraiser by the Department of Veterans Affairs who’s on their rotation. You with me on that? It’s very different.
So, for example, there’s a particular appraiser here in our neighborhood. His name is Jay. Jay owns his own appraisal company, and Jay also is considered a VA appraiser because he’s licensed by the VA, he’s contracted by the VA to go out and inspect the property. So that is why, you as a Veteran, need to order an appraisal because the lender, I’m giving you the money, I want to make sure that the money I’m giving you on the collateral is worth what I’m giving you, right? In other words, it’s just got to make sense.
I’m not going to give somebody $500,000 for a property that’s only worth $200K. That would be negative equity. That’s not a good loan. That’s the reason why that the VA requires an appraisal.
One quick follow up, if the VA appraiser is going out there, they’re going to look for three things okay. Three things. Number one is that the property is safe. Number two, that the property is structurally sound. Number three, that the property is sanitary. As long as you check those boxes, no safety hazards, that its structurally sound. It’s not fallen apart and that it’s sanitary, no mold.
You’re not going to really run into any issues with the VA loan. And I think the last part that I would say about the VA appraisal is that the VA appraiser is going to use the exact same comps that a conventional or FHA appraiser will. It’s important to know VA appraisals are not more difficult or more challenging.
There’s some certain things that you need to be aware of, which I just discussed sanitary, structurally sound, and no safety hazards, but as long as you check those boxes, you as the Veteran will not have any issues when it comes to the VA appraisal. Good to go?
For more information, my team and I are here to be a resource for you regarding the VA appraisal and why you need it to purchase a home.