Certificate of
Eligibility - A certificate that is issued by the Veterans Administration
office which states that the veteran is eligible for a VA insured
loan.
You must have a certificate of eligibility to acquire a VA loan.
This can be obtained online in most cases now but can be done through
normal mail. There are two VA centers in the USA which handle VA
eligibility certificates:
Los Angeles Eligibility Center
P.O. Box 240097
Los Angeles, CA 90024
Toll free number: 1-888-487-1970
VA Loan Eligibility Center
PO Box 20729
Winston-Salem, NC 27120
Toll free number: 1-888-244-6711
VA - Department of Veterans Affairs: a federal agency which guarantees
loans made to veterans; similar to mortgage insurance, a loan guarantee
protects lenders against loss that may result from a borrower default.
The VA home loan benefit is called an entitlement.
VA guaranteed loans are made by lenders and brokers to veterans
for the purchase of a personal home. The guaranty means the lender
is protected against loss if you fail to repay the loan. The guaranty
replaces the protection the lender normally receives by requiring
a down payment allowing you to obtain favorable terms.
With a VA loan you finance 100% of the purchase price as well as
the funding fee.
A note to the borrower:
There is usually quite a bit more paper work involved in processing
a VA loan. There are extra disclosures that need to be signed along
with stricter underwriting guidelines. They may require letters
of explantions for various items on credit reports etc...
The guarantee is called the VA Funding Fee. It's a percentage of
the loan amount and can either be paid at closing or added to the
loan amount.
Although you are paying for the funding fee you are getting a lower
rate in exchange. This means over the life of your loan you could
save thousands of dollars over other conventional loan programs.
