Frequently
Asked Questions
General
- Eligibility - Pre-loan
- Construction/Valuation - Post
Loan
Construction
/ Valuation FAQs
Construction
Valuation Questions about the Physical Condition of the Home, Building
a Home, and its Appraised Value
- Can
I build a new home with a VA loan? Can I be my own contractor?
- Will
the appraiser make sure everything is o.k. with the home I am buying?
- The
reasonable value came in lower than the amount I agreed to pay for
the house. Is there any way I can still purchase it?
1.
Can I build a new home with a VA loan? Can I be my own contractor?
Although they
are allowed by law, most lenders do not make construction loans for
VA loans, largely due to risks and costs of construction disputes.
You can be your own contractor, but you will have to find your own
source for construction financing. Once the home is complete, you
could then get a VA loan to refinance the construction loan.
Funds from the
VA loan could also be used to pay off the balance of the loan on the
land, provided that the total VA mortgage amount does not exceed the
VA reasonable (appraised) value of the property. The house would be
considered an existing home once construction was complete. It would
have to meet VA Minimum Property Standards that apply to existing
homes. These can be found in chapter 13 of the lender's handbook.
2. Will
the appraiser make sure everything is o.k. with the home I am buying?
No. The appraiser
is not an inspector. VA does not guarantee the condition of the house
you are buying. VA guarantees only the loan. If you have any doubts
about the condition of the house which you are buying, it is in your
best interest to seek expert advice before you legally commit yourself
in a purchase agreement. Particularly with a previously occupied house,
most sellers and their real estate agents are willing to permit you,
at your expense, to arrange for an inspection by a qualified residential
inspection service.
Also, most sellers
and agents are willing to negotiate with you concerning what repairs
are to be include in the purchase agreement. Steps of this kind can
prevent many later problems, disagreements, and major disappointments.
3. The
reasonable value came in lower than the amount I agreed to pay for
the house. Is there any way I can still purchase it?
There are basically
three options
1. Renegotiate
the purchase with a lower selling price.
2. Pay the difference between the selling price and the reasonable
value yourself, since the loan cannot exceed the reasonable value
plus the funding fee.
3. If you believe there is an error in the appraisal, you can ask
the local VA office to review it. Be sure to specifically identify
where you believe the appraisal is in error and why.
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