Request for Determination of Reasonable Value Explained

VA Form 26-1805 

 

After you start the process of applying for a VA loan to purchase a home, one of the first things you and your lender need to do is request an appraisal on the home. To do so, you or your lender will use VA Form 26-1805: Request for Determination of Reasonable Value. That may seem confusing at first; why not “request for appraisal”? However, the primary purpose of the appraisal is to determine the reasonable value, which makes the name of the VA form a little bit easier to understand. In most situations, the lender will take care of requesting the appraisal, in which case you won’t need to worry about filling out this form, but there are some cases in which the borrower may be required to request the appraisal or simply want to do so instead of the lender. In cases like these, instructions on how to do so can be very welcome.

 

How to Fill Out the Form

The first thing to know about this form is that the VA requires it to be filled-out with a computer. All of the answers on the form must be typed and not handwritten. Handwriting can often be difficult to read, and it’s very important that all of the information on this form be correct. Most of the information here should be fairly easy to access. Your lender should be able to provide your case number, and the seller of the home should be able to provide the legal description of the home. For #4, Title Limitations and Restrictive Covenants, you’ll generally know what those are by the time you are requesting the appraisal. Generally if there are easements on the property you’ll want to ask the lender if they would be considered title limitations, but you’ll usually only run into title limitations and restrictive covenants if the home is a condo or is in an HOA. If the home is in a condo or HOA, you’ll need to get the documentation from the managers to show what limitations there are.

 

Lot dimensions should be easy to find, as should most of the other information in question 7-13b. If you’re not sure on any of those questions, you can ask the seller and they should be able to answer them for you. Most of them, however, are things you should probably have found out before you agreed to buy the home. The information from 14a-23 may need to come from the seller, as they are things that you may not know at this point. You’ll need to get the originator’s identity number from your loan officer, as well as the sponsor’s identity number and the institution’s case number.

 

If you’re buying a new or existing construction, then you can skip #28. If the building is proposed or under construction, you’ll need to not only answer those questions about the builder and warrantor, but also attach construction exhibits to this form when you submit it, which the appraiser will use to help determine the reasonable value of the property. Starting with #29, you may need a lot more help from your loan officer, the seller, and possibly even local government offices in order to get the information they are asking for. It can be helpful to attach the proposed sale contract to the form, and #38 is the place you can indicate whether you have done that. The rest of the form is under the “Certification for Submission to VA” section, and is all fairly straightforward. The signature of the person authorizing the request is the only field that can be hand-written. The rest must be typed.

 

The form itself also has some instructions on the backside that give guidance on some of the fields that may not be as obvious. It gives instructions on the name, address, and zip code fields, the legal description, title limitations, lot dimensions, removable equipment, construction completed, comments on special assessments and/or homeowner association charges, mineral rights, leasehold cases, and sale price. As you fill out the form, you should look at those instructions and understand them, as well as use this document as a guide for where you can get the required information.

 

Underwriting VA Loans for Military Veterans

Most of the year 2010, up to this point, has been easy sailing for most of the approved VA lenders at Low VA Rates.  The mortgage industry had purged out most of the bad apples (Lenders who were doing bad loans) and left standing are generally the strong and stable banks and mortgage companies.

Last year in a press release dated 1-28-09 (Mortgage Industry Faces Huge Bottleneck), Low VA Rates tried to educate and explain to all military and veteran homeowners and buyers that the amount of time needed to process, underwrite and approve VA loans would be substantially longer than It had normally been in the past.

Due to the recent drops in VA mortgage rates we have seen hit historically low levels, the mortgage industry is now facing similar issues to those we saw in early 2009.  One of the approved VA lenders, us, Low VA Rates, has said the following recently, “In the last 2 weeks we have seen our big lenders like Wells Fargo, Freedom Mortgage and Met Life all drastically slow down in the amount of time it is taking them to get our VA loans approved.”  It is tough because the homeowner normally does not like to or want to hear excuses and just wants the loan to get done quickly!”  “In all honesty our hands feel like they are tied,” said Nate Burt, Loan Officer.

All Veterans and military homeowners should look to understand that patience, although difficult at this time, is needed at times like this.  As we took a good long look into the published VA underwriting turn times from some lenders many of them we see have almost tripled from where they were just a month ago.  It is important that loan officers work hard to educate and communicate with their clients so as to make sure everyone’s expectations and set correctly and no misunderstandings arise.

This is not the first time that we have heard this, but we all know it to be true: “Patience pays off the most when it seems to be the hardest.” I promise that you will not regret it!

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*Annual savings calculator based on 2015 monthly average savings extrapolated year-to-date.