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Louisville Kentucky VA Home Loan Mortgage Lender: Kentucky VA Home Pest Termites Inspection Fees and...
Veterans Benefits Administration Circular 26-22-11
Department of Veterans Affairs June 15, 2022 Washington, D.C. 20420
Pest Inspection Fees and Repair Costs
1. Purpose. This Circular addresses the Department of Veterans Affairs policies regarding wood destroying pest inspection fees and repair costs.
2. Background. Historically, VA has authorized, as a local variance, that Veterans may be charged for a wood destroying pest inspection report in a limited number of states and territories.1 Localities susceptible to termites and other wood destroying pests, however, are on the rise. Accordingly, VA requires, as a Minimum Property Requirement, a wood destroying pest inspection report for certain properties located in an area on the Termite Infestation Probability Map2 where the probability of termite infestation is “very heavy” or “moderate to heavy.”3 If applicable, the VA Notice of Value (NOV) will be conditioned for this requirement and MPR repairs identified on a wood destroying pest inspection report must be completed prior to guaranty.4
3. Action. Effective immediately, VA is authorizing in advance, as a local variance, that Veterans may be charged wood destroying pest inspection fees, where required by the NOV. Veterans may also pay for any repairs required to ensure compliance with MPRs. Veterans are encouraged to negotiate the cost of the wood destroying pest inspection and repairs with the seller.
a. Documentation for Audit Purposes. An itemized invoice identifying the Veteran and the property is required to verify the cost on the Closing Disclosure Statement (CD). Lenders should include the invoice(s) to support the cost of the inspection and any repairs in the loan file if the loan is selected for Full File Loan Review (FFLR).
4. Paperwork Reduction Act. The information collection requirements contained in this document have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. § 3501-3520) and assigned OMB control number 2900-0515. In accordance with the Paperwork Reduction Act, VA may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number
1 38 C.F.R. § 36.4313(d)(1)(ix).
3 VA Lenders Handbook, Chapter 13, Topic 8.c.
4 38 U.S.C. § 3704(a), 38 C.F.R. § 36.4351.
Mortgage Loan Officer
Mortgage Approval Underwriting Myths Debunked
Getting approved for a loan is not as hard as some make it. The 3C approach breaks it down in its simplest form so no need to overthink or complicate with “what if’s” or variable situations and these factors are the same in every state. They all have to line up for your loan to be approved but here there are in order of significance
Capacity - No matter if your credit is in 800’s the ability to afford a loan (capacity aka DTI) is the MOST important C and why most applications either get denied or reduced. Income is EVERYTHING.
To get a conforming (FHA / VA / Conventional) loan you need 2yrs of verifiable Full time income even if it’s pieced together with different employers with 2yrs W2’s and your most recent paystub if you’re an employee and OT and/or bonus cannot be used if you’ve been with your employer for less than 2yrs.
If you have part time employment as well that income cannot be used unless you’ve worked both jobs for at least 2yrs UNLESS your P/T job is the exact same as your F/T job and your hours are not variable then in most cases you can get an exception if you’ve been there for at least 1yr. If you’re self employed 2 most recent tax returns with positive income on line 31 of your schedule C.
If homeownership is your goal, then don’t be cheap and have a certified tax preparer prepare your taxes because it’s likely you’ll need certain docs to get approved only they can provide. Also DO NOT write off all your income to avoid paying the IRS taxes because this will disqualify you from a loan and you’ll have to get a more expensive loan with a bigger down payment.
Credit - many people think this is the most important but it’s not but it is important. With a high enough capacity (low DTI) I’ve seen clients with minimum scores get approved. FHA requires 580, VA does not have a minimum score requirement and while some lenders can do down in the 500’s generally most lenders do not go below 580, and conventional requires 620.
Having said all that just because you meet the minimum score does not mean you’ll get an approval before credit profile (positive tradeline history, collection activity, credit usage) is what matters most. I’ve seen applicants with 680+ get denied for conventional loans because they have a poor credit profile or low capacity (higher DTI).
FHA is a little more forgiving which is why they are easier loans to get than conventional. Obviously the higher the score, the better the chances are for approval but high scores aren’t needed if capacity and collateral are strong.
Collateral - aka down payment. Underwriters request either 1 bank statement for FHA or 2 bank statements for conventional and all they are looking for is verification of cash to close, large deposit (FHA more than 1% of loan amount deposited in 1 deposit) activity and reserves if needed, not spending habits. Large purchases are irrelevant and NSF’s can be explained with an explanation letter. The higher the down payment in percentages (3.5 or 5%, 10%, 15%, 20% etc…) not dollars ($2000 or $5000 more than required) then the lower the risk and higher chance of approval especially for conventional loans. Plus dollars don’t noticeably reduce your monthly payment but percentages do.
Overlays - additional restrictions some lenders have in addition to standard mortgage guidelines. If your lender is telling you anything more is required than what’s posted above it’s because they have overlays which make it more difficult to get approved with them.
Example - Veteran’s United will not take credit scores under 620 = OVERLAY
If you want a personalized answer for your unique situation call, text, or email me or visit my website below:
Mortgage Loan Officer
Individual NMLS ID #57916
American Mortgage Solutions, Inc.
10602 Timberwood Circle
Louisville, KY 40223
Company NMLS ID #1364
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Kentucky FHA appraisals can take home buyers by surprise. That’s why we've put together some good-to-know info about the process. Feel free to use this to help educate your clients.
Your Kentucky FHA Home Appraisal Checklist
If you’re using an Kentucky FHA loan to buy a home (or selling to FHA borrowers), the property must pass an FHA appraisal, which determines the current market value and makes sure the house meets certain safety standards. Here is a list of items an FHA appraiser may look for:
General Health and Safety
- Foundation or structural defects
- Whether the utilities (water, sewage, heat, and electricity) all work
- Chipped or peeling paint in homes built before 1978
- Incomplete renovations
- Water damage
- If the property is accessible to vehicles, especially emergency vehicles
- Exposed wiring and uncovered junction boxes
- Whether the house is too close to outside hazards, such as a leaking oil tank or a waste dump
- Excessive noise, such as being close to an airport
- Missing handrails
- Leaky or defective roof and holes in the siding
- Leaning or broken fencing
- Doors that don’t properly open or close
- Condition of gutters, chimney, stairs, railings, and porches
- If swimming pools are up to code
- Whether each room has electricity
- Whether each room has a window or door to the exterior to be used as a fire escape
- Missing or broken appliances usually sold with a home, including stove and refrigerator
- Broken or leaking sink
- Broken or leaking toilet, sink, or tub/shower
- No ventilation (either an exhaust fan or window)
Crawl space or basement
- Basement moisture
- Evidence of past or present standing water
Heating and Plumbing
- Inoperable HVAC
- Major plumbing issues and leaks
These are some common items an FHA appraiser looks for, but other issues that might make a house unsafe could keep it from passing. An FHA appraisal is not the same as an independent home inspection. It’s still a good idea to get a separate home inspection to make sure you’re making a wise investment!
Updated FHA Info Letter Sent July 12, 2022 for Kentucky FHA Appraisal Reports
✨Applies to case numbers assigned on or after June 1, 2022
✨Updates the initial appraisal validity period from 120 days to 180 days from the effective date of the appraisal report;
🙌🏼Extends the appraisal update validity period from 240 days to one year from the effective date of the initial appraisal report;
✨Allows the appraisal update to be ordered AFTER an appraisal expires; and
👊🏼Eliminates the optional 30-day extension.
✨This is big news for FHA ✨
The guideline change also puts FHA appraisal expirations on par with conventional loan expiration dates.🥊
List of Kentucky FHA Appraisers below: