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Certificate of Reasonable Value

DEFINITION

A document issued by the Veterans Administration based on an approved appraisal of a property. This document establishes the maximum value of a property for the purposes of the  VA, and therefore the maximum value of a potential purchaser’s VA loan.

EXPLANATION

The value that the Veterans Administration places upon a property, which is defined by the   Certificate of Reasonable Value, is directly tied to the maximum value of a loan the VA is willing to guarantee for the purchase of that property.

-Example

Verne Veteran has picked out a home he would like to purchase and is planning on using a VA   guaranteed home loan to do so. Before he can take out the loan, the Veterans Administration examines an appraisal of the home’s value, determining it to be $540,000. Therefore, the maximum value of a VA loan on that property would be $540,000.

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