VA Loan Terms You Need to Know
Lawyers have their own jargon they use in their practice. So do doctors or accountants or electricians and plumbers. Its commonplace for any industry to establish specific terms that are used every day in the course of doing business. And as you might expect, VA loans have their own suite of language that might need some explaining before you being your VA home loan journey. There’s not enough room to explain all of the terms you may hear, but here are a few of the more popular.
Lock. A lock refers to the VA lender guaranteeing an interest rate to a borrower. Interest rates fluctuate daily and sometimes throughout a single business day. Until the borrower locks in a rate, the interest rate is not guaranteed. VA lenders take locks just as seriously as borrowers do and will only lock in a loan if the borrower has applied for a loan and has a property among other requirements,
Points. A point is expressed as a percentage of the loan amount. One point on a $200,000 loan is $2,000. Points are called “discount points” because paying them reduces the interest rate on a selected mortgage.
LAPP. This acronym stands for the Lender Appraisal Processing System. LAPP status is awarded approved VA lenders the authority to underwrite and approve a VA residential appraisal report.
Assumption. VA loans have a unique feature called “assumability.” A buyer can assume an existing VA mortgage on a property instead of applying for a brand new loan on their own.
COE. The Certificate of Eligibility is the official document that verifies a veteran’s eligibility for the VA home loan benefit. The veteran can request the COE directly from the VA or an approved VA lender can request the COE electronically on behalf of the veteran.