Certificate of Reasonable Value (CRV)
Definition
A Certificate of Reasonable Value (CRV) is an official document issued by the Department of Veterans Affairs (VA) following an appraisal of a property that is intended to be purchased or refinanced using a VA loan. The CRV establishes the maximum loan amount the VA will guarantee and serves as an assurance to both the lender and the veteran borrower of the property’s fair market value. This certificate helps ensure that veterans are not overpaying for a property and that the VA’s guarantee is based on a sound valuation.
Examples
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Buying a Home with a VA Loan: John, a retired veteran, applies for a VA home loan to purchase a new house. The VA assigns an appraiser to evaluate the home and issues a CRV that states the property’s value is $300,000. This amount becomes the maximum loan value that John can obtain through the VA loan program.
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Refinancing an Existing Mortgage: Sarah, another veteran, decides to refinance her current mortgage using a VA loan. The VA appraiser assesses her property and issues a CRV of $250,000. This establishes the maximum loan amount for her refinancing process through the VA.
Frequently Asked Questions
Q1: What is the purpose of a Certificate of Reasonable Value? A1: The main purpose of a CRV is to determine the maximum loan amount that the VA will insure for a property, protecting veterans from overpaying and ensuring the loan is secured by a fair market value.
Q2: How is the value on a CRV determined? A2: The value is determined by a VA-certified appraiser who conducts a thorough appraisal of the property, comparing similar properties and considering factors such as condition, location, and market trends.
Q3: Can a CRV be contested if the borrower disagrees with the appraisal value? A3: Yes, if the borrower or lender disagrees with the appraisal, they can request a reconsideration of value by providing additional market data or comparable sales that might support a higher value.
Q4: How long is a CRV valid? A4: A CRV is typically valid for six months from the date of issuance. For new construction properties, the validity may extend to 12 months.
Related Terms
1. VA Loan: A mortgage loan offered by the U.S. Department of Veterans Affairs (VA) to help veterans, active-duty service members, and eligible surviving spouses buy, build, or refinance homes with favorable terms.
2. Appraisal: An unbiased professional opinion on a property’s value, conducted by a licensed appraiser, typically required in the lending process to ensure the property’s market value is accurately represented.
3. Fair Market Value: The price at which a property would sell under normal market conditions, i.e., a transaction between a willing buyer and a willing seller, both having reasonable knowledge of the relevant facts.
4. VA Funding Fee: An upfront fee paid to the VA to help cover losses on loans that may go into default, typically financed into the loan or paid at closing.
Online Resources
- Department of Veterans Affairs Official Site
- VA Appraisal Guidelines
- Federal Housing Administration (FHA) Resource Center
References
- Department of Veterans Affairs, “VA Home Loans.” Available at: https://www.va.gov/housing-assistance/home-loans/
- Federal Housing Administration, “Appraisal Guidelines.” Available at: https://www.hud.gov/program_offices/housing/sfh
- Investopedia, “VA Loan.” Available at: https://www.investopedia.com/terms/v/va-loan.asp
Suggested Books for Further Studies
- “The VA Loan Book: How to Get the Most from Your Veteran Benefits” by Chris Birk
- “VA Loans: Helping Veterans Achieve Homeownership” by Lauren Zebehazy
- “Home Buying Kit For Dummies” by Eric Tyson and Ray Brown
