This week in our ongoing recap series exploring smart real estate investment choices for service members, we take a look at VA loan inspection requirements.
Homes have to meet certain criteria if you're planning to use a VA loan. This ensures veterans own safe, sanitary homes. The requirement is basically that the home must be inhabitable and safe for you and your family to live in. Lenders require condos are pre-approved if you want to use a VA Loan.
What's included in a home inspection?
Expect a VA home loan inspection to be thorough. Remember that the lender wants to know the home is a sound investment. So that means a licensed and trained inspector will evaluate the property for current or expected problems. This includes heating and cooling systems, plumbing, electrical systems, and a careful review of the roof and insulation. Inspectors also check out crawl spaces, floors, ceilings and the foundation. Then, the inspector creates a report that details the current condition of the home - along with any potential problems.
Reasons why homes fail inspection
Inspections are designed with your safety in mind! A home might fail an inspection if there's an issue with the heating system. Same goes for if the property has an outdated electrical system. Issues with the roof and damage to windows are also big red flags. So are pest problems, rotting wood, and water stains.
Exceptions to the rule
Some exceptions to these requirements exist. You can purchase a property with unpermitted improvements, but the area won’t count toward the home’s value. Leasehold estates are also allowed if the term of the lease must exceed the length of the mortgage by 14 years. With the VA renovation loan, you can buy a home that needs fixing up. In this case, you can borrow up to $1.5 million so long as your remaining VA eligibility amount plus the equity in the property has to be at least 25 percent of the purchase price. The minimum repair amount is $5,000, though there is no maximum. This includes structural and major rehabilitation repairs. The repairs must start within 30 days and be completed within six months.
There’s also a VA energy efficiency mortgage (EEM) home loan option. It allows the home buyer to add up to $6,000 for energy efficiency upgrades. The stipulation is that the amount of money you save with the upgrades monthly has to be greater than what they will add to your mortgage.
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David Pere is an active-duty Marine who is on a mission to educate the military community about financial readiness. Most people hear that term and roll their eyes, but Pere wants everyone to know that readiness can be achieved – without a lot of effort. He teaches personal finance and real estate investing to service members to help increase savings and increase their chances of achieving financial freedom.
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