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Unformatted text preview: or a Determination of Eligibility and Available Loan Guarantee Entitlement. These forms must be accompanied by evidence of military service. At present, veterans receive their certificate of eligibility with their discharge from service. The Certificate of Eligibility indicates the amount of the veteran's entitlement. The entitlement is the maximum number of dollars that the DVA will pay if the lender suffers a loss. Since the maximum entitlement is $60,000, the maximum guarantee on a loan is therefore $60,000. GENERAL INFORMATION ON DVA LOANS
The FHA has a number of loan programs. In contrast, the DVA has only one program, offering either fixed or adjustable interest rates, and one set of rules that generally applies to all its loans. No Down Payment – The DVA does not require a down payment – the veteran is allowed to borrow the full amount of the purchase price. What happens if the DVA appraises the property for less than the purchase price? At one time, the DVA would not allow the veteran to pay more than
Dynasty School (www.dynastySchool.com) 5-37 REAL ESTATE FINANCE
its appraisal. This caused real problems, since many veterans were willing and able to do so. This regulation prevented these veterans from purchasing a house of their choice. The regulation has since been eliminated. Now, the DVA will allow a veteran to pay more than the appraisal, but the loan amount cannot exceed the appraisal. The difference between the purchase price and the appraisal has to be in cash, and the money cannot be borrowed. Type of Property – The DVA guarantees loans on properties from one to four units and units in planned unit developments and condominiums. The DVA approves new properties only if they were built under FHA or DVA inspections. If a property was not built with FHA or DVA inspections, you have to wait one year after the house has been completed. Then you can order the appraisal. Some exceptions to this one–year rule are (a) property located in a remote area where obtaining FHA or DVA inspections would be inconvenient; (b) property built by a small builder who does not normally use DVA loans to finance the sale of houses. Owner Occupyi...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10