Veterans and active duty service members enjoy many benefits provided by the Department of Veteran's Affairs. One benefit is the guarantee of home loan financing through VA mortgage loans. If you meet the eligibility criteria -- based on length and type of service -- you can apply for a VA loan. Because the loans are guaranteed by the VA, mortgage lenders can relax the lending requirements -- such as the need for a down payment. However, applicants are required to obtain a home appraisal before the loan can be made. On average, VA appraisal fees are more expensive than those for a conventional mortgage because they are more involved.
Aside from the eligibility rules and no down payment requirement, the rest of the VA loan approval process is similar to a that of a conventional loan. The lender requires an appraisal to verify the fair market value of the property. A local licensed real estate appraiser visits the home to complete the appraisal. The value is determined by using information gathered by touring the property and comparing recent sales data of other similar homes in the area.
The fees for a VA loan's appraisal are typically higher than the fees would be if you were obtaining a conventional mortgage to purchase the same property. On average, the appraisal costs between $300 and $500 for a single-family home. Multi-unit home appraisals are more expensive by approximately $100. However, the price ultimately depends on where the property is located, because most appraisers work independently and set their own rates.
VA mortgage appraisal fees cost more because the appraisers are required to provide more details to the lender. The appraiser performs a basic home inspection in addition to the appraisal. He may discover that certain repairs are needed before the appraised value can be set. The seller would be responsible for paying for these repairs and getting them completed in a timely fashion.
It's possible for the appraised value of the property to be less than the asking price, and the lender cannot approve a VA loan for an amount that exceeds the appraised value. You have a few options for dealing with a gap between the appraised value and the asking price. The seller might be willing to come down on the price to close the deal faster. If the appraiser made a mistake or you believe the appraisal is unfair, you can request a second appraisal, but you must pay for it.
- Comstock/Comstock/Getty Images
- VA Appraisal Guidelines
- Can I Waive Escrow on a VA Mortgage?
- How to Qualify for USDA 502 Home Loan Program
- Conventional Vs. VA Mortgage
- What Is the Difference Between a USDA Loan & an FHA Loan?
- Closing Price vs. Appraisal Price in PMI Cancellation Rules
- How Does a Mortgage Company Appraise Your House?
- What Can a Veteran Do If He Gets Denied a Mortgage?