Using the VA Benefit a Second Time After a Claremont Sale

A persistent belief among people who have already used the VA home loan is that the benefit was a one-time thing and it is spent.

It is not a one-time program. Veterans buy with it more than once as a matter of course, particularly people whose service moved them repeatedly. What is true is that the mechanics of using it again depend on your entitlement situation, and that is a VA question with a real answer specific to you.

This article covers the concept and the preparation. Everything numeric belongs to the VA and a VA-approved lender.

The concept of restoration

When the benefit is used, entitlement is engaged in connection with that loan. When circumstances change, most commonly when the property is sold and the loan is paid off, entitlement can generally be restored so that the benefit is available for another purchase.

How that works, what evidence the VA needs, whether it happens automatically or on request, and what the situation looks like if a previous loan is still outstanding are all questions with answers at the VA and with your lender. There are also situations involving a loan that was assumed by someone else, which is a different picture again and is discussed in VA loan assumptions.

The thing to take away is that a previous use is not a closed door. It is a starting condition to be established before you plan a purchase.

Establish it before you shop

Every version of this goes better when it is handled in advance. A buyer who assumes and then discovers a wrinkle in week two of an escrow is in the worst possible position for a process that involves records and an agency.

Ask the VA where your entitlement stands. Ask your lender to confirm what that means for the purchase you are contemplating. Do it before you are attached to a house.

The general sequence, and the Certificate of Eligibility that carries this information, is in getting certificate-ready for a Claremont purchase.

What to keep from the first purchase

Owners who used the benefit years ago and kept nothing find this harder than it needs to be.

Keep the closing documents from the original purchase. Keep the payoff documentation from the sale, which is the evidence that the loan is satisfied. Keep any correspondence with the VA about the loan. Keep the Certificate of Eligibility you were issued.

KEEP THE PAYOFF PROOF. It is the single document people most often need and least often have.

Store it somewhere a move cannot lose it. Households that relocate often are precisely the households most likely to have the documentation scattered across three states.

The common Claremont situations

A veteran who bought at a previous duty station, sold on relocation, and is now buying here. This is the standard case and generally the cleanest one, provided the previous loan is paid off and documented.

An owner who kept a previous home as a rental and wants to buy in Claremont as well. That is a materially different situation, because a loan is still outstanding. It has answers, and they are lender and VA answers, and they need to be obtained before an offer rather than after. The landlord side of that decision is in renting out a home after a PCS.

A veteran whose previous loan was assumed by a buyer. The entitlement picture depends on how the assumption was handled, which is exactly why assumptions deserve care at the time.

A surviving spouse using benefits, which is its own subject and is covered in surviving spouses and VA home benefits.

Occupancy still applies to the new purchase

Using the benefit again does not change what the benefit is for. A new purchase is still built around a home the borrower lives in, with the certification described in occupancy certification on a VA purchase.

If you are keeping a previous property, be straightforward about the plan with your lender from the beginning. It is a normal situation with a normal treatment; it is only a problem when it surfaces late.

What this does not mean

It does not mean approval is assured. Eligibility and entitlement are one thing, and a lender's underwriting of your current income, obligations, and the property is another. Both have to work.

It does not mean the second purchase looks identical to the first. Your circumstances have changed, program details change over time, and the market you are buying in is not the one you bought in before.

It does not mean an article can tell you where you stand. Only the VA can do that, from your record.

The short version

Assume the benefit is available again until the VA tells you otherwise, but establish it before you shop rather than after. Keep the payoff documentation from the last sale. Tell your lender the whole picture, including any property you still own.

For the wider picture, start at the Claremont military and VA buyer hub.

Anthony Grynchal has been licensed in California since November 2009.