VA Loan Purchasing: What About Restoration Of Entitlement

There are certain conditions in which a veteran who has previously purchased a home using a VA home loan, can take their previously used entitlement and actually have it restored to its original amount.  This is what restoration of entitlement is all about.  It allows veterans to purchase another home.

Of course, to reap the benefits of this provision, one or the other of the following required conditions must be met.  First, the property that was bought with the previous VA loan must already be sold and the loan should be paid in full.  Second, the buyer (also called a qualified veteran-transferee) agrees to assume the remaining balance on the previous VA loan.  This buyer will then substitute his or her entitlement for the same amount of entitlement that was used by the seller.

Restoration of entitlement can be granted only once.  The veteran must have already paid the loan in full.

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Interesting Historical Highlights Of The Veterans Administration

For the many veterans who take advantage of the financing resources of the VA to obtain home loans, it is often overlooked how amazing the existence of such an organization is in the history of the world.  The Veterans Administration or the Department of Veterans Affairs is the outgrown of nearly four centuries of military veterans assistance programs in America.

From the time of the Pilgrims at Plymouth, onward to the fledgling United States, and on to the conflict of the Civil War, efforts have been taken to provide for the medical and financial assistance of disabled veterans.  Everything from pension plans to state-ran veteran hospitals were developed during the 17th, 18th, 19th, and 20th centuries.

The Veterans Administration was established in 1930 and continued to expand throughout the 20th century.  In time, home lending assistance became a recognized part of the VA broad system of veteran's benefit programs.  The VA offers one of the most complete systems of its kind in the world.

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What Are Fees That Must Be Authorized By The VA?

Often, when you have a VA home loan there are other fees that may be charged, but which must be authorized by the VA to become applicable.  It is the lender that will contact the local VA office seeking approval of these additional fees, which may be included among the closing costs.  They may be assessed if they are typically paid the borrower in certain areas or jurisdictions or if they are considered reasonable and customary in the same district.

Take a look at the following fees, many of which that will be covered by the lender if not approved by the VA:

• document preparation fees
• preparing loan papers
• attorneys services other than for title work
• photographs
• interest rate lock-in fees
• postage and other mailing charges
• stationery
• telephone calls
• amortization schedules
• escrow fees or charges
• notary fees
• trustee's fees or charges
• loan application or processing fees
• charges by loan brokers
• tax service fees

It is also possible that these fees can be incorporated with other closing costs into the cost of the loan and then paid by the seller.  There is some room for negotiation in these matters, so it might be helpful to consult the real estate agent or even the lender when deal with this stage of the transaction.

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Wartime And Peacetime Eligibility Differences For VA Loans

What are some more exact requirements for eligibility for those veterans who are interested in obtaining home financing assistance from the Veterans Administration?  Briefly, a veteran is eligible for VA home loan benefits if he or she served on active duty in any of the following branches of the armed forces: Army, Navy, Air Force, Marine Corps, or Coast Guard.  Furthermore, you must also have been discharged under any conditions other than dishonorable after a certain time period.

These time periods are based upon whether you served during wartime or peacetime.  For those veterans who served during wartime, the timeframe for eligibility is 90 days or more.  If the veteran served during peacetime, the amount of days for eligibility is 181 continuous days or more.

Specific periods of wartime and peacetime that are covered under the provision of the VA's General Rule for Eligibility, include the following periods of time:

Wartime - World War II: 9/16/40-7/25/47; Korean conflict: 6/27/50-1/31/55; Vietnam era: 8/5/64-5/7/75; Persian Gulf War: 8/2/90 – undetermined

Peacetime - Post-World War II period: 7/26/47-6/26/50; Post-Korean period
2/1/55-8/4/64; Post-Vietnam period: 5/8/75-8/1/90

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Refinancing and Second Mortgage Options – How to Make the Right Choice

Refinancing your first mortgage and second mortgage options are two ways to get more money in your pocket.  They are each distinct in their benefits, though.  With refinancing you will end up with a lower monthly payment and pay less overall on your home loan.  With a second mortgage you will be able to get a large sum of money right now to take care of your financial needs.

Both options – refinancing and second mortgage – can work for you.  You just need to understand how they work so you can choose the one that is the best solution for your situation.

What Happens During Refinance?

Most of the time a homeowner chooses to refinance because the interest rates have fallen lower than what their current rate is at.  This allows the homeowner to lock in at that lower rate.  You basically are just getting your loan transferred to a new loan package with the lower rate.  It is usually pretty straightforward and involves no major decisions.  Your focus is really on the rate because nothing else will change.

Refinancing can be a good choice for you if you are finding monthly bills are making for a tight budget.  You will be able to free up some money each month to make things easier.  However, if you need more than some extra money each month to help you out, then a second mortgage may be a better idea.

The Second Mortgage Option

With a second mortgage you are actually getting a whole new additional mortgage on your home.  You will have to find a lender and go through the same process that you went through when you got your first mortgage.  There are closing costs and choices to be made about terms.

A second mortgage will work for you if you need a large amount of money.  However, you must remember that you will have that additional mortgage payment each month.

Making the Choice

Your personal situation will really dictate your choice between refinancing and second mortgage.  You should consider all the aspects of both options.  It is important that no matter what choice you make that you understand all the details of the transaction completely.

Always read through the paperwork and ask questions about anything you do not understand.  Also be sure that you figure your budget with the option you chose.  This way you can prevent any problems with being able to afford your new mortgage situation.  Refinancing and second mortgage options can really help you make your financial situation better.  You just need to make the right choices and be educated.

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