One of the many unique benefits of a loan secured by VA is the ability to buy a home and use part of the loan proceeds (s) to repair it before d & # 39; move. The only other type of loan similar to this could be permanent construction financing (also guaranteed by the AV). In other words, the VA will under certain circumstances guarantee loans so that you can buy and rehabilitate a house that needs repairs and you and the lender know the repairs required before the renovation. closing. You will not find that elsewhere.
Basically, you will have two loans, one for the initial purchase and a second or additional loan for rehabilitation work. This first loan will almost certainly require that your home evaluate and pass the inspection, even in its dismembered state. In other words, the sink will need running water and the furnace will have to heat the house. You must carefully coordinate the purchase and rehabilitation not only your lender, but also with a chartered appraiser before making any commitments. While this adds a level of complexity that is not normally found in residential mortgages, keep in mind that the US government is about to support the deal with guarantee. Go for it!
Some Key Rules
It is important that you know some of the key rules established by the AV for this type of transaction. The titles below have been modified to help the reader and all the rules are not reformulated here – only those that seem very prominent.
The VA can guarantee a loan for the alteration and repair
of a residence already owned by the veteran and occupied as a house, or
o made in conjunction with a loan at the time. ; purchase on the property.
B. The modifications and repairs must be those ordinarily found on a similar property of comparable value in the community
C. The cost of alterations and repairs to structures can be included in a loan for the purchase of improved property to the extent that their value justifies the loan amount.
D. An additional loan is a loan for the modification, improvement or repair of a residential property. Residential property must
secure a loan secured by VA, and
be owned and occupied by the veteran, or the veteran will be reoccupied at the end of major alterations, repairs or repairs. improvements.
E. Any modifications, improvements or repairs must be aimed at protecting or substantially improving the basic habitability or usefulness of the property, and be limited primarily to the maintenance, repair or maintenance of the property. replacement, improvement or acquisition of real estate. , including appliances.
F. The installation of features such as barbecue pits, swimming pools, etc., does not meet this requirement.
G. A maximum of 30% of the proceeds of the loan can be used for the maintenance, replacement, improvement, repair or acquisition of non-fixations or near-devices such as refrigeration, cooking , washing and heating. the main modification for which the loan is proposed
H. An additional loan will require VA's prior approval if
o the loan will be made by a lender who is not the holder of the currently guaranteed obligation
o the loan must be made by a lender who does not have
A person liable for the obligation currently in course will be released from personal liability by the effect of the law or otherwise
If this type of transaction You look attractive, submit your application to your officer loan and carefully walk through a dress rehearsal with everyone involved, including an appraiser and a home inspector who are licensed and know what they're doing. This is another of many ways to convert your VA loan guarantee to a higher net worth. Caveat: This is an opinion of the author and should not be relied on as a substitute for any advice offered by your lender who will be the final arbiter of everything. discussed here.
Copyright 2009 © Thomas Kerns McKnight, JD, CMB