Clay: Hi there guys, Clay Johnson with Castle & Cooke Mortgage here with Cheryl Knowlton, and as if you guys didn’t know she is dynamite with Dynamite Productions. And so Cheryl, you know you had said when we talked about that last PA segment, you’re like, “I hear the voices and the questions in my head on this,” because this comes up so often with veterans, that is on the appraisal.
Clay: Tell us what that question was that popped into your mind.
VA appraisals are not always the lowest
Cheryl: I know some of you are asking this, “Why do VA appraisals consistently or oftentimes come in so much lower than they do for conventional loans?” I know for myself personally, very, very sad story. Back before I was a real estate professional I was a mortgage loan officer selling my home in California. I had three offers on my beautiful little home in Oakland, California in twenty-four hours. One was FHA, one was VA and one was conventional. Guess which one was the highest?
Clay: The VA!
Cheryl: Yes! The VA was the highest and I was the most afraid of that one in terms of repairs and conservative appraisal, so I didn’t take the best offer that would’ve put more money in my pocket because of my fear. So help us understand this Clay.
Clay: Well, with the VA, it was one of the few things that’s ordered very different than it is on a traditional appraisal today. And so you have the VA portal that you’re ordering that through. They are really kind of their own, they have their own little checklist of things that they’re looking for specifically that meet that requirement. But the nature of that is so you know it’s a more conservative loan by what it is. Then there’s really when you look at it from a VA, there’s a higher requirement for appraisers to be able to do VA.
Cheryl: Yes. Not all appraisers can do VA.
VA has different requirements for their appraisals
Clay: No, just like FHA and then VA even has a different requirement. So to do a VA, you have to meet certain requirements. Well, they know that the majority of the time there really is a higher level of financing. Closer to that 100% financing level, and so when they’re financing everything, there’s just this kind of natural tendency to be a little more conservative in how they’re going to bring that appraisal in. And so that’s one of the things that a lot of times people fear.
It’s not as strict as it used to be as far as guidelines, property evaluations and conditions that used to be there. They do rely on the underwriter a little bit more to kind of evaluate those things. If there’s something then they will mark that subject too, but it’s not as big of fear as people kneaded in their mind. That is kind of the nature of why those tend to be a little bit more conservative.
Cheryl: Uh-huh (affirmative). Good answer. All right, everybody, thanks for being here. If you have questions about the VA loan in general or specifically about the 100% construction loan for VA, that is absolutely phenomenal. Give Clay a call and until next time we’ll see you later.