House hunters who want VA mortgages have to clear a few obstacles in the beginning to get their VA home loan and close on the home. Applying for VA loan eligibility is the first milestone; other important accomplishments include getting pre-approved for the loan, choosing a home and having the property appraised by a VA-assigned professional.
Once the papers are signed and the deal is closed, it's the end of the line for the VA mortgage process-the home is bought and the payments become due. But some vets buy their first home with a VA mortgage only to outgrow it in a few years. Those who start families or add to them may decide it's time to move into a larger property and start exploring the market again.
Can a homeowner sell and apply for a new VA loan for a bigger, better place?
Those who want to take out a new VA loan have options-some of which depend on how much VA eligibility was used the first time around, and others depend on whether the original mortgage is completely paid off or not.
Some forget (or don't realize) that it's possible to take out a VA loan without using 100% of their eligibility-there's a partial benefit that remains for qualified applicants. If you qualify to use your remaining eligibility (see your local VA rep about your specific circumstances) you can check with your loan officer and real estate agent about when and how to begin. But what about those who have used their full entitlement the first time around?
The rules on VA loan eligibility are fairly simple. If the first property is sold and the VA mortgage completely paid off, VA borrowers can apply to have their eligibility to take out a VA home loan restored. The key to applying is to have the loan paid in full with no outstanding payments due.
There's also a one-time offer for anyone who has paid their VA mortgage in full but hasn't sold the property yet. These guidelines do not apply if the loan was foreclosed on and the borrower has an outstanding balance.
Full eligibility is not available for those who still owe money on the property. Restored eligibility is not possible for those who surrendered a deed in lieu of foreclosure or when the VA has approved a compromise claim on the property. In cases when a veteran wants to sell the home and buy a new one, once the original mortgage gets paid off in full the borrower is then free to apply to the VA for restored eligibility.