VA Loans

Obtaining A VA Loan

The CRV (certificate of reasonable value) is issued by an appraiser and it confirms the estimated value of the property in question. Note: The requested loan amount may be greater than the value stated in the CRV. So it is important that anyone seeking a VA loan, on a specific piece of property, have an appraisal done and a certificate issued as soon as possible. The prospective buyer, the seller, a real estate agent or the lender can all request a VA appraisal by simply filing out a VA Form 26-1805, Request for Determination of Reasonable Value. After completing the form either mail it to the Loan Guaranty Division of the nearest VA office for processing or an appraisal can be requested by calling the Loan Guaranty Division for assignment of an appraiser. The local VA office may be contacted for information concerning its assignment procedures. The appraiser will then bill the requester according to a fee schedule approved by VA.

Note: An appraisal is not an inspection of the property to check it for any defects and you should always have an inspection conducted, too.

Making Application

Just like any other conventional loan, your credit, employment status and your ability to repay the loan will be investigated, and documentation will need to be provided to validate any statements you make. If your credit inspection comes back ok and the appraised value of the house is no less than the amount you are requesting the lender will then be able to proceed to closing under the VA's automatic procedure. Typically, only about 10 percent of VA loan applications need to be sent to the VA offices for approval before closing, so the process is quite simple and straight forward if your credit and the appraisal are in order.

VA Loan Costs

To further assist veterans in acquiring a loan and a property the VA has allowed for reduced fees in some cases. There is a basic funding fee of 2.0 percent that needs to be paid to the VA by all but certain exempt veterans, however, a down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent.

The same applies for all eligible Reserve/National Guard individuals. First there is a basic funding fee of 2.75 percent that must be paid, but by paying a down payment of 5 percent or more, these vets will reduce the fee to 2.25 percent and a 10 percent down payment will reduce it to 2.0 percent.

Refinance funding fees for loans, to an existing VA home loan, with a new VA home loan to lower the existing interest rate is 0.5 percent.

A funding fee of 3 percent is charged to Veterans who are using entitlement for a second or subsequent time who do not make a down payment of at least 5 percent.

NOTE: A Veteran may either pay cash for funding fees or have them incorporated into the loan itself.

On top of all of this a lender may require a Veteran to pay some additional closing costs and they are not allowed to be incorporated into the loan itself. The Veteran seeking the loan, the seller of the property, or both, sharing the burden jointly may pay these costs. Because the laws and local ways of issuing loans may vary from state to state, and amongst the lenders, be sure to always check before hand and know what will be assessed in the way of additional closing costs in your specific case.

Some of the costs that may be assessed are:

• The VA's appraisal
• Your credit report
• 1% for the loan origination fee
• Recording fees
• Local and state transfer taxes
• and possibly a Survey fee, too

One benefit that Veterans may enjoy, no matter where they live or the size and type of a loan they may be signing on, is that they may not be assessed brokerage, commission or buyers fees by anyone.

Entitlement Restoration

Each vet is typically allowed $36,000 for entitlement benefits. If the vet has had a VA loan previously and some of their entitlement was not accessed they should check with the VA authority to see what remains of their entitlement, if anything. The rates for entitlement have changed in recent years. Previously they were set at a ceiling of $12,500 for a loan of $25,000. If the previous loan is still not satisfied, and cleared, a vet can still request the difference in entitlement which is $23.000 in this particular case. If the loan that a vet is seeking exceeds the value of $144,000, to purchase or build a new home, they may request an additional $14,750 for entitlement.

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