The state of Washington has a sizeable military population, including Army and Air Force personnel at Joint Base Lewis-McChord, and Navy personnel stationed along the coast. As a result, there are many home buyers in Washington who can benefit from using a VA loan.
This program offers a number of benefits, including the ability to buy a house with no money down and no mortgage insurance. And that’s a double-win for borrowers.
Now, a new bill introduced into Congress could bring even more benefits to the table. Specifically, it would allow home appraisers to conduct digital or “desktop” appraisals of homes being purchased with a VA loan. This could expedite the process and possibly reduce costs for the borrower.
Rules for VA Loan Appraisals in Washington
The home appraisal is one of the basic requirements when using a VA loan in Washington. The Department of Veterans Affairs requires a full home appraisal for all properties being purchased with a VA-backed mortgage loan.
The appraisal does two things:
- It helps the bank or mortgage lender understand the current market value of the home.
- It determines whether or not the house meets the VA’s property requirements.
To accomplish these goals, a VA-approved home appraiser will review the house being purchased and compare it to recent sales in the area. The appraiser might also examine Multiple Listing Service (MLS) data, tax records, and other sources.
Again, the primary goal is to determine the current market value of the house. The appraiser will assign a value and report it back to the mortgage lender, where it becomes part of the loan file.
But VA loans aren’t unique in this regard. Whenever a mortgage is used to buy a house, lenders order an appraisal to determine market value. This is true for FHA, VA and conventional programs.
A Congressional Push for Digital Home Appraisals
Now, in 2022, it seems that the VA home appraisal process could be moving in a more modern direction. A bill recently introduced into Congress would give appraisers the ability to conduct digital or “desktop” appraisals in Washington State, and elsewhere across the U.S.
This new legislation (officially named the Improving Access to the VA Home Loan Act of 2022) would allow VA loan appraisers to rely on digital data alone in some cases. In other words, they wouldn’t always have to visit the home in person as they do now.
This change could help to expedite and simplify the VA loan appraisal process in Washington. It would allow for so-called “desktop appraisals” to be used. That means the appraiser could assess the market value without leaving his or her desk, relying on digital data.
According to GovInfo.gov, the Improving Access to the VA Home Loan Act bill was introduced into the U.S. Senate in May 2022. The bill’s sponsor, U.S. Senator Dan Sullivan (R-Alaska), is a member of the Senate Committee on Veterans’ Affairs.
The proposed legislation has a ways to go before receiving a full approval. But there’s a good chance it could receive bipartisan support in both the House and Senate. Bills that benefit servicemembers and veterans tend to garner a lot of support.
According to a fact sheet on this proposal:
“veterans using a VA home loan are required to have an in-person appraisal performed by a VA-approved appraiser prior to purchasing their home. However, there are often lengthy wait times … That results in veterans being forced to wait longer to complete the homebuying process and move into their new home than they otherwise would, especially in the increasingly competitive housing market.”
If approved, this legislation could also reduce closing costs for Washington State home buyers who use VA loans. Generally speaking, desktop appraisals cost less than onsite evaluations.
Giving Home Buyers an Advantage in the Marketplace
The digital home appraisal bill is one of several proposals that could make the VA loan program more appealing to home buyers in Washington. Such enhancements could give these buyers a much-needed advantage in the real estate market.
Over the summer, the Department of Veterans Affairs also changed its policy for termite inspections on homes purchased with a VA loan. In the past, home buyers weren’t allowed to pay for termite inspections and related repairs. That put the burden on the seller, giving sellers one more reason to be wary of VA loans.
But all of that will soon change. As the VA announced in June 2022:
“Veterans may be charged wood destroying pest inspection fees, where required by the NOV. Veterans may also pay for any repairs required [and] are encouraged to negotiate the cost of the wood destroying pest inspection and repairs with the seller.”
Some sellers believe that VA loans are more cumbersome to deal with, when compared to a conventional mortgage loan. They believe the government’s requirements and “red tape” could create unwanted hassles or expenses for the seller.
Those perceptions aren’t entirely accurate. The truth is VA-guaranteed mortgage loans have a similar closing timeframe as conventional (non-government-backed) mortgage products. Even so, these perceptions do exist, and they could bring additional challenges for buyers.
The idea behind the recent push for VA modernization is to remove some of these hurdles, putting VA loan home buyers on even ground with buyers using “regular” mortgages. And that would be a step in the right direction.