COE: The Veterans’ Gateway to VA Home Loan Benefits

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It’s just fair for Veterans to have a meaningful civilian life after dedicating their lives serving the country and its citizenry. To compensate for their dedication, the U.S. Department of Veterans Affairs (VA) has created programs to make the lives of Veterans comfortable as they transition from being active service members to ordinary citizens. The VA home loan is among the popular programs that help Veterans fulfill their American dream of becoming a homeowner.

Veterans who want to obtain a VA-backed home loan must first secure a Certificate of Eligibility, commonly called a COE. The COE serves as a proof for mortgage lenders to verify that they are qualified to get a VA-backed home loan. To secure a COE, Veterans, as well as active duty service members and surviving spouses of Veterans need to show evidence to prove their eligibility. For example, Veterans and current or former National Guard or Reserve member who has been activated for Federal active service are required to have a Certificate of Release or Discharge from Active Duty or a copy of DD Form 214. The document shows the character of service and a detailed explanation of the separation.

VA-backed loan borrowers have three options to apply for a COE. Veterans who have collated their documents may apply online through the eBenefits portal, through postal service using the VA Form 26-1880, or through their preferred lender. Mortgage lenders usually have an easier way to assist Veterans in securing a COE. Aside from a COE, Veterans who plan to apply for a VA home loan must also have a satisfactory credit score, sufficient income, and the home they will buy will be used as their primary residence.

Watch out for these common COE errors and ways to fix it

When applying for a COE, it is critical for Veterans to watch out and immediately fix these COE common errors or discrepancies that may result in the delay of their home loan application. For example, Veterans need to ensure that their personal details, Entitlement, and Funding Fee Exemption information are correct. Veterans are required to resubmit a new application whenever they need to correct an error.

VA loans made it possible for Veterans to get favorable terms from lenders

Veterans who have successfully secured their COE may start looking for mortgage lenders to obtain a VA-backed home loan. Veterans should keep in mind that private lenders, not the VA, provide the loans. Unlike conventional loans, VA loans offer very little or even zero percent down payment. Moreover, the seller may shoulder closing costs, lenders can’t charge a penalty for Vets who choose to pay off their mortgage early, and Veterans are not required to have a private mortgage insurance. The VA insures the loan that the lenders provide to eligible Veterans. Generally, Veterans can utilize their VA loans to buy or build a home, finance a home to make it energy-efficient, and refinance to lower their interest rate or take cash out from the home’s equity.

Eligible Veterans should first apply for a COE if they want to utilize their VA Home Loan benefits. If you already have a COE or you’re planning to apply for one, you may want to get in touch with a professional loan advisor.

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