31 March 2008
No down payment with the VA Loan Program
Posted by VA Loan Pro under: Uncategorized .
If you are a veteran who is interested in using your VA Home Loan Guarantee benefit, then you should know that you can purchase a home with no down payment. Not having to wait the years it could take to save money for a down payment on purchasing a home is one of the best benefits of the VA Home Loan Guarantee Program. Even though you do not have to have a down payment to purchase a home through the VA Home Loan Guarantee Program, you do have to follow the rules of the program to use this no down payment benefit. One of the main rules to not needing a down payment is that the purchase price of the home must not be higher that the value of the home. Here are the steps you should take to determine the value of your home and make sure that you do not need a down payment to purchase your home through the VA Home Loan Guarantee Program:
• To determine the value of a property you must have an appraisal which is required by the lender and the VA. An appraisal is required when you are purchasing a home so that the lender is certain that the home is worth the amount of the loan. Since you do not have a down payment you are borrowing the full value of the home. This is only allowed by the lender because the VA guarantees a portion of the loan which is equal to a large down payment and is why you are not required to place your own down payment on the home at the time of purchase.
• An appraisal will estimate the fair market value of the home and the price should be based on this value. The fair market value is determined by an appraiser by looking at the other homes in the same area that have recently sold that are similar to the home you want to purchase. The homes are compared by square footage, attributes, bathrooms, bedrooms, property size, and other amenities, and then the sale prices are compared to determine about how much the home that is being appraised would sell for on the real estate market at that point in time.
• If you have agreed to pay a higher price for the home that its appraised value you should consider re-negotiating the purchase price of the home. Most sellers will accommodate a lower selling price rather than breaking the deal because the lender will not lend you more that the appraised value of the home.
• If the seller is willing to let you walk away from the deal rather than allowing the sale price of the home to drop, then you do have other alternatives. Some sellers believe that they can get more that the appraised value for their home, or they may owe more that the appraised value for the home, and therefore can not sell the home for less.
• You can request a reconsideration of value for the appraisal of the home. To do this you have to notify the VA in writing to the office of jurisdiction. This is whatever VA Home Loan Service Center is in control of the area in which you are in. A re-appraisal may be done, or a reconsideration depending on information that you may give the VA on property amenities that the appraiser may not have been aware of, or new improvements or additions to the home.
The best way to avoid potential problems with the no down payment option of purchasing a home through the VA Home Loan Guarantee Program is to try and inform the appraiser of all the features of the home in order to make sure that the appraisal value of the home meets or exceeds the anticipated purchase price. It is the responsibility of the seller to inform the appraiser of the homes perks, amenities, and recent improvements, but as the buyer you should make sure that the seller understands that the lender will not allow you to borrow any amount over the appraised value which makes it in the seller’s best interests to keep the appraiser well informed in order to make sure the appraisal is successful and meets the needs of all parties involved.
For more information on the VA Home Loan Guarantee Program and how to purchase a home with no down payment go to http://www.homeloans.va.gov
3 Comments so far...
Rampa Says:
28 April 2008 at 2:24 pm.
Cheers for the insight, There are some posts I found quite interesting, in this blog.
Angie Says:
7 May 2008 at 7:12 pm.
I think the most important step is to be realistic in what you can and cannot do. I’ve seen so many first time home buyers jump into something they cannot afford only because they have big dreams.
Do your homework done first if you are thinking about taking out a loan or mortgage. The time spent looking into your options can save you a good deal of money later on.
Tiffany Says:
30 May 2008 at 7:32 pm.
Has anyone had any luck with an appraisal reconsideration?
