HOW TO GET A VA LOAN ENTITLEMENT RESTORATION

The word “entitlement” often confuses many veterans who are seeking financing for the purchase of their homes.

However, the term “entitlement” simply describes something veterans earned for their service to the nation and, in this case, it is a VA Loan benefit.

The entitlement is a dollar figure that the Veterans Administration will repay in the event of a veteran defaulting on a mortgage backed by the VA.

USING VA LOAN ENTITLEMENTS TWICE

Veterans who use their VA Home Loan benefits for their first home purchase normally do not think about using the benefit for a second time because they are generally quite happy with the rate and terms they received on the first loan.

However, many veterans are unaware they can use the benefit more than once and reap the same rewards as the first loan. In this instance, veterans would need to have their VA loan entitlement restored.

RESTORING VA LOAN ENTITLEMENTS

The most popular reason why veterans want to use their benefits for a second time is to buy another home.

In order to use the benefit more than once, veterans either need to have some of their entitlement remaining from the first use or apply to have the benefits fully restored.

To apply for a VA Loan entitlement restoration, veterans mustfill out VA Form 26-1880 with an emphasis on section 8 of the form.

The VA requires that veterans meet certain eligibility requirements before they have their entitlements restored.

The first loan must be paid in full and the property must be sold.

1

It is acceptable if veterans sell their home and use the proceeds to pay the VA loan.

The VA will sometimes request a copy of the HUD-1 settlement statement to verify the sale of the home.

Veterans must use the second home purchased as their primary residence.

2

However, the VA does allow a one-time exception to the requirement that veterans must sell their first home.

If veterans choose to exercise the one-time restoration allowance and receive an approval, they can keep the first property and use it as a vacation home or rental property.

The VA will require veterans to dispose of all property in the future if they reapply for another VA loan entitlement restoration.

REMAINING ENTITLEMENT

The VA Home Loan Program guarantees that it will pay lenders 25% of the loan amount up to $144,000 in the event of default, which means that the veterans’ entitlement is $36,000.

However, if a veteran buys a home or condo that is less than $144,000 such as $88,000, then the VA will guarantee to pay $22,000 in the event the veteran defaults, which is 25% of the original $88,000.

Using this scenario, the veteran will have $14,000 of remaining entitlement.

Veterans seeking restoration of their entitlement must realize that the process is not automatic or guaranteed.

Specific disqualifying factors include a foreclosure or short sale on the first property with a remaining balance or the veteran forfeited their deed-in-lieu of foreclosure.

Mortgage Originator Jimmy Vercellino, specializing in VA loans, helps veterans use their VA loan benefit to their greatest advantage.

Be a proud homeowner today. For more details call 480-351-5904 or visit the site www.valoansforvets.com

VA Loans for Vets7702 E. Doubletree Ranch Road, Suite 220Scottsdale, AZ 85258Phone: (480) 351-5904Email: jimmyv@fcbmtg.com