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VA Loans: What is the Notice of Value?

When a Veteran or active duty service member wants to pre-qualify for a VA home loan, they fill out the application paperwork with a lender and start looking for a home within their price range. The appraisal gives the Department of Veterans Affairs the fair market value of the home.

Once the VA has calculated that figure, it issues a document called the Notice of Value. This tells the lender and the borrower quite a bit when it comes to the asking price of the property. Is it a reasonable price? Does it need to be renegotiated? If the buyer is comfortable with the asking price compared to the Notice of Value, the deal can close.

But what happens to the Notice of Value once the deal is done? Does the buyer even need to think about it again?

VA Requirements for Notice of Value

VA requirements include a stipulation that the lender maintains a copy of the Notice of Value for at least 24 months after the loan is closed. Appraisals are considered part of the loan record, and as such are included in the rules listed in VA Pamphlet 26-7. “Lenders must maintain copies of all loan origination records on VA guaranteed home loans for at least two years from the date of loan closing.”

Borrowers thinking about refinancing their home at some point could need to reference the original Notice of Value as part of the refinancing application. For VA-to-VA refinancing or VA Streamline financing, a Notice of Value is not needed.

But when it comes to cash-out refinancing, the VA requires an appraisal. Will the original Notice of Value do? Check with your loan officer—chances are, the VA will require a new appraisal to get the current fair market value of the property based on today’s market conditions, which may have changed since the original Notice of Value was issued.