Federal Benefits for Veterans and Dependents - CT.gov

Chapter 5 Home Loan Guaranty 47estate agent, or lender can request a VA appraisal by completing VAForm 26-1805, “Request for Determination of Reasonable Value.”The requester pays for the appraisal upon completion, according to afee schedule approved by VA. This VA appraisal estimates the valueof the property. It is not an inspection and does not guarantee thehouse is free of defects. VA guarantees the loan, not the condition ofthe property.Closing Costs: For purchase home loans, payment in cash isrequired on all closing costs, including title search and recordingfees, hazard insurance premiums and prepaid taxes. For refinancingloans, all such costs may be included in the loan, as long as the totalloan does not exceed the reasonable value of the property. Interestrate reduction loans may include closing costs, including a maximumof two discount points.All veterans, except those receiving VA disability compensation,those who are rated by VA as eligible to receive compensation as aresult of pre-discharge disability examination and rating, and unmarriedsurviving spouses of veterans who died in service or as a resultof a service-connected disability, are charged a VA funding fee. Forall types of loans, the loan amount may include this funding fee.Required Occupancy: To qualify for a VA home loan, a veteran orthe spouse of an active duty servicemember must certify that he orshe intends to occupy the home. When refinancing a VA-guaranteedloan solely to reduce the interest rate, a veteran need only certify toprior occupancy.Financing, Interest Rates and Terms: Veterans obtain VA-guaranteedloans through the usual lending institutions, including banks,credit unions, and mortgage brokers. VA-guaranteed loans can haveeither a fixed interest rate or an adjustable rate, where the interestrate may adjust up to one percent annually and up to five percentover the life of the loan. VA does not set the interest rate. Interestrates are negotiable between the lender and borrower on all loantypes.Veterans may also choose a different type of adjustable rate mortgagecalled a hybrid ARM, where the initial interest rate remainsfixed for three to 10 years. If the rate remains fixed for less than fiveyears, the rate adjustment cannot be more than one percent annu-