VA loans are one of the best mortgage programs available in the market currently. These loans are guaranteed by the Department of Veterans Affairs (VA). These loans are aimed at the veterans of the country and the spouses of the veterans. In the event of default by the borrowers, the federal government comes forward in rescue of the VA lenders. Several benefits attached with this loan offer has made it a very popular choice for the veterans in the country. Based upon the entitlement of a qualified veteran, the Department of Veterans Affairs guarantees the VA-backed loans. Before applying for a VA loan, the veteran has to obtain the certificate of eligibility (COE). The COE spells out the entitlement amount for the veteran. Currently, the basic entitlement amount in the country is $36,000. As per the law, the VA will guarantee a loan to the tune of four times the entitlement amount, i.e, $144,000.
Usually, the veterans who have taken advantage of the VA loan, don't think of using it again. But, there may be some veterans who want the VA mortgage eligibility to be restored. In fact, under some circumstances, borrowers can actually restore the VA loan entitlement. Restoration of the VA loan entitlement actually empowers the veterans to apply for a fresh VA loan again and to reap the same benefits as they derived while taking out the first VA loan. Usually restoration of the VA loan entitlement is possible when the borrower has sold off the property and paid off the mortgages completely. Restoration of the entitlement is also possible when the borrower has paid off the mortgages completely but still owns the property.
Restoration of VA loan entitlement
Borrowers are eligible to buy a new home with restored VA loan entitlement only if they have paid off the first loan in full and sold off the property. Again, for one time restoration of the VA loan entitlement, the borrowers may not have to compulsorily sell off the property but the first loan has to be repaid in full. Here, however the borrowers who want to utilize one time restoration allowance will have to compulsorily dispose of all properties in the future in case they seek for restoration of VA loan entitlement again.
In fact once the first loan is paid off in full, there is no rule related to the disposition of the first property. The first home may serve as a vacation property or a rental property without any restriction or penalty being imposed on it by the Department of Veterans Affairs.
Borrowers have to however keep it in mind that restoration of VA loan entitlement is not an automatic process. Borrowers need to apply for the restoration of VA loan entitlement. Borrowers can move forward with the process of applying for a new VA loan, only after the application has been processed and entitlement has been restored.