Information on Entitlements
A VA entitlement is when the Veteran Affairs promises a certain amount will be paid to the lender if a borrower in the military defaults on their mortgage loan. If this happens the VA will attempt to recover any losses that the VA incurs through their legal right they have (ie. Collections, etc.). VA entitlement does not mean that their will be any type of payment to the borrower or to the financial institution (bank).
Entitlement Rules Of The Road
There is a specific entitlement amount located on the document known as the COE. The maximum amount that is allowed to be on the COE for a VA entitlement is $36,000. Using the entitlement on yoru VA loan is very important. Borrowers should pay attention to the amount of entitlement, as well as the rules and regulations of the entitlement. A borrower may use up to an amount of $60,000 of entitlement for a loan consisting of $144,000 or greater. You must also understand that the COE will never show that the extra $24,000 has been used. There will be a place on the COE form that will note the available entitlement amount.
Assume Your VA Entitlement Position
The VA entitlement you receive is for one mortgage loan at a time.
If someone assumes your VA mortgage loan, then your entitlement benefits get transferred to that person and remain with the same loan that you got financing for the mortgage. Your full entitlement benefits will not be restored until the original loan is paid in full.
In order to get a new loan with your VA benefits, you must have the maximum amount of entitlement benefits. You will need to have the Certificate of Eligibility updated. Lenders will need verification on the updated COE (certificate of eligibility) that the veterans maximum entitlement amount, which is $36,000 USD has been restored.
More Information on Entitlements
Multiple uses of VA Entitlement
Veterans are allowed to use their entitlement multiple times. If a veteran has paid off their previous loan and let go of the aforesaid property they are eligible to restore their entitlement for use once again. There is also a one-time opportunity to have your entitlement restored if you pay off your loan, but are still in possession of the property.
Choosing whether to Restore Entitlement Benefits
There is a process and particular document that must be completed in order to have your VA entitlement restored to the maximum (full) and it will be the VA’s (Veteran Affair’s) final decision on whether or not this is permitted. To reuse your entitlement is common and to know you have this option again is a great benefit to our veterans.
A Certifitcate of Eligibility is Essential for VA Entitlement
Entitlement is an important part of a VA loan and is taken seriously. Obtaining help from the VA during circumstances that require financial assistance can be necessary. Military personal and veterans should read the COE information regarding entitlement upon receiving a VA loan.