Purchasing an existing home can be a great way to save money. It can also be a great way to purchase a money pit if you are not careful. If you use VA financing, there are certain property requirements the home must meet in order to qualify. However, an appraiser determines if the home meets the MPR or Minimum Property Requirements. An appraiser’s job is much different from an inspector’s job. Therefore, the appraisal is not as in-depth as the inspection. However, a home inspection is not a requirement for a VA loan. Most lenders would highly recommend it, though.
How a Property Qualifies for a VA Loan
The MPRs or Minimum Property Requirements the VA needs a property to meet are to make sure the property is safe and livable. Of course, the appraiser also needs to make sure the home is worth the value of the loan or banks would enter loan agreements already on the losing end.
Essentially, appraisers must look for the following:
- Safety
- Sanitation
- Soundness
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The appraiser must evaluate the living space, mechanical systems, utilities, roof, and windows. He looks for the following:
- Living Space – The home must have enough room for a family of your size. It must also have a working kitchen and bathroom with all facilities in good working order. There must also be enough room for everyone to sleep.
- Mechanical systems – All electrical and plumbing systems must be in good working condition. There cannot be any archaic systems or systems with many faults present in the home. Small issues may be able to be overlooked, but not anything that puts the safety of the home or its residents at risk is allowed.
- Utilities – The home must have a working heating system as well as adequate water supply. The heating unit must reach every room in the home and the water needs to meet local codes, especially if it is not a public water supply.
- Roof – The roof must be in good condition and have at least 3 years left on it. There cannot be any leaks or holes in the roof. If there are, the seller must repair them before the loan can close.
- Windows – There cannot be any broken windows on the property. Broken windows affect the curb appeal, safety, and soundness of the home.
How a Home Inspection Differs
Even though the Minimum Property Requirements seem fairly in-depth, they still do not compare to a home inspection. The inspector takes a much more serious look at all aspects of the home. The inspector is there to tell you of any defects or potential defects in the home. He is not concerned with the value of the home.
The inspector has your best interests in mind. He wants to make sure the home is safe and free of any hazards. An inspector looks for things like:
- Termites
- Mold
- Leaks
- Cracks in the foundation
- Cracks in flooring
- Broken seals in windows and doors
- Sump pump issues
- Adequate insulation
The inspector looks at the “guts” of the home rather than just the surface of everything in the home.
Closing on a VA Loan
You do not need a home inspection to close on a VA loan. However, if you work a contingency into your sales contract for the inspection, it can work to your favor. Generally, the contingency gives you a certain time period to secure the inspection. You must work with the seller for the inspector to gain access to the home. Once the inspector looks at the home, he will provide you with a written report. You have until the date the contingency expires to act upon the inspection.
For example, if the inspection came back stating there was a problem with some of the flooring, you have a few choices:
- Ignore it and fix the problem yourself as long as it passes the appraisal and the lender provides funding
- Negotiate with the seller to fix the problem or to decrease the sales price to allow you to pay for the problem
- Back out of the sales contract and look for a different home
The appraisal will not likely show problems with the flooring unless the cracks were obvious to anyone walking through the home. If it is a problem, the inspector had to really look closely to find, the appraisal will probably not note the problem.
If you are averse to purchasing a home with cracked flooring because you do not have the money to replace it, you may not want to purchase the home. Without the home inspection, though, you would never know the problem existed.
The home inspection does mean higher closing costs, but it is for your protection. With the report in hand, you know the exact condition of the home you purchase. With the trained eye of the inspector, you can determine if the home has any current or even potential problems. Consider it foresight into what you may experience if you purchase a home that has serious issues. Generally, the inspection is money well spent.
