When you get a VA loan it is required that you have a termite inspection done and you get all section 1 and section 2 items on the termite report fixed and then get a termite clearance report from the termite inspection company before the lender will fund your VA loan. Additionally, when you buy a home with a VA loan or refinance from a non VA loan to a VA loan, you will need to have a property appraisal done by a VA appraiser. On many occasions this VA appraiser will note on the appraisal that minor repairs have to be complete before the lender will fund the VA loan.
It is very important when you apply for a VA loan that you and your Realtor are aware and prepared for the possibilities of appraisal repair costs and termite clearance costs. Both of these costs have
to be paid before you can close on the loan.
Now the question is who usually pays for these costs in a home purchase where you are using a VA financing? Is it the seller or the VA borrower? The answer is it all comes down to what you negotiate. In many cases you can get the seller to pay for both the required VA appraisal repairs and termite repairs, but in some cases you cannot. In this current market dominated by short sales and bank owned foreclosures, it is often somewhat difficult to get the seller to pay for these costs. If the seller has a choice to accept another offer that is not a VA loan (and will not have to pay for these costs), you may not have a lot of negotiating leverage, and you will need to be prepared to have to the cash on hand to pay for these costs. This negotiating is why it is important to use a Realtor experienced in working with VA borrowers, which can assist greatly with this negotiating process. I can refer you to a Realtor experienced with VA borrowers if you would like.
A minor point is the VA borrower cannot pay for the termite inspection itself (but this is a minor cost that is at most $75). But the VA borrower is allowed to pay for the termite repairs and the appraisal repairs.
The repair items that come up in VA appraisals are generally fairly minor, but can run from a few hundred dollars to even a few thousand to fix. Here is a small sample list of some common items that come up in VA appraisals that need to be fixed prior to close:
- damaged stucco fixed
- scrap and re-paint areas with peeling paint
- replace missing window screens
- replace broken windows
- replace broken closet doors
- the property has to have some kind of flooring (bare concrete not OK)
- all kitchen cabinet doors attached
- no exposed wires
- security bars removed or have quick release
So in summary, be prepared for these possible expenses or issues when you are buying a home with a VA loan or refinancing into a VA loan.
So if you have VA loan benefits and can get a VA loan, you may want to consider looking into it. Some excellent advantages to VA loans:
- VA is the only major 100% financing, zero down home financing option available today
- VA loan credit scores do not have to be perfect to get the best VA interest rates
- Interest rates VA loans are STILL at historic lows
- VA loan limits in California cities like San Jose, San Francisco, Los Angeles, San Diego and more can get up very high to above $800,000 with zero down
- The guidelines to qualify VA loan are much more flexible than conventional and FHA loans
Give me a call (858-922-7899) or email () if you have any questions or want to apply for a VA loan.
Sr. Loan Officer (and VA specialist)