- 5 Guiding Factors and Relative Information
Application required for VA Loans is not so complicated:
Apply for a Certificate of Eligibility. A veteran who doesn't
have a certificate can obtain one easily by completing VA Form
26-1880, Request for a Certificate of Eligibility for VA Home
Loan Benefits and submitting it to one of the Eligibility
Centers with copies of your most recent discharge or separation
papers covering active military duty since September 16, 1940,
which show active duty dates and type of discharge.
you are a first time home buyer you should decide on the home
you want to buy and sign a purchase agreement.
Order an appraisal from VA. (Usually this is done by the
Apply to a mortgage lender for the loan. While the appraisal is
being done, the lender (mortgage company, savings and loan,
bank, etc.) can be gathering credit and income information. If
the lender is authorized by VA to do automatic processing, upon
receipt of the VA or LAPP appraised value determination, the
loan can be approved and closed without waiting for VA's review
of the credit application. For loans that must first be approved
by VA, the lender will send the application to the local VA
office, which will notify the lender of its decision.
Close the loan and the buyer moves in.
Obtaining VA Loans
VA Appraisal - Certificate
of Reasonable Value
The CRV (certificate of reasonable value) is based on an appraiser's
estimate of the value of the property to be purchased. Because the
loan amount may not exceed the CRV, the first step in getting VA
loans is usually to request an appraisal. Anyone (buyer, seller,
real estate personnel or lender) can request a VA appraisal by
completing VA Form 26-1805, Request for Determination of Reasonable
Value. After completing the form, it can either be mailed to the
Loan Guaranty Division at the nearest VA office for processing or an
appraisal can be requested by telephoning 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 send a bill
for his or her services to the requester according to a fee schedule
approved by VA. To simplify things, VA and HUD/FHA (Department of
Housing and Urban Development/Federal Housing Administration) use
the same appraisal forms. Also, if the property was recently
appraised under the HUD procedure, under certain limited
circumstances, the HUD conditional commitment can be converted to a
VA CRV. The local VA office can explain how this is done.
It is important to recognize that while the VA appraisal estimates
the value of the property, it is not an inspection and does not
guarantee that the house is free of defects.
First time home buyers or those interested in a
rent to own home, should be encouraged to carefully inspect the
property themselves, or to hire a reputable inspection firm to help
in this area. VA guarantees the loan, not the condition of the
The application process for VA financing is no different from any
other type of loan. In fact, the VA application form is the same as
that used for HUD/FHA and conventional loans. The mortgage lender
verifies the applicant's income and assets, and obtains a credit
report to see that other obligations are being paid on time. If all
is well and the appraised value of the property is enough to cover
the loan needed, the lender, in most instances, can then close the
loan under VA's automatic procedure. Only about 10 percent of VA
loan applications have to be submitted to a VA office for approval
Residential Mortgage Loans
Residential Mortgage Loans help you to buy a home, including a
townhouse or a condominium unit in a VA approved project
To build a home,
To simultaneously purchase and improve a home,
To improve a home by installing energy related
features such as solar or heating/cooling systems, water
heaters, insulation, weatherstripping/ caulking, storm
windows/doors or other energy efficient improvements approved by
the lender and VA. These features may be added with the purchase
of an existing dwelling or by refinancing a home owned and
occupied by the veteran. A loan can be increased up to $3,000
based on documented costs or up to $6,000 if the increase in the
mortgage payment is offset by the expected reduction in utility
costs. A refinancing loan may not exceed 90 percent of the
appraised value plus the costs of the improvements.
refinance an existing home loan up to 90 percent of the Va
established reasonable value or to refinance an existing VA loan
to reduce the interest rate,
To buy a manufactured home.
A basic funding fee of 2.0
percent must be paid to VA by all but certain exempt veterans. 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.
A funding fee of 2.75 percent must be paid by all eligible
Reserve/National Guard individuals. A down payment of 5 percent or
more will reduce the fee to 2.25 percent and a 10 percent down
payment will reduce it to 2.0 percent.
The funding fee for loans to refinance an existing VA home loan with
a new VA home loan to lower the existing interest rate is 0.5
Veterans who are using entitlement for a second or subsequent time
who do not make a down payment of at least 5 percent are charged a
funding fee of 3 percent.
NOTE: For all VA home loans, the funding fee may be paid in cash or
it may be included in the loan.
In addition, reasonable closing costs may be charged by the mortgage
company. These costs may not be included in the loan. The following
items may be paid by the veteran purchaser, the seller, or shared.
Closing costs may vary among companies and also throughout the
nation because of differing local laws and customs.
VA loans costs may include VA appraisal, credit report, loan
origination fee (usually 1 percent of the loan), discount points,
title search and title insurance, recording fees, state and/or local
transfer taxes, if applicable, survey
No commissions, brokerage fees or "buyer broker" fees may be charged
to the veteran buyer.
Supatra Chowdhury, is an international research scholar and a part
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