Veterans’ Benefits Improvement Act of 2008 enhances VA loan guaranty program
Veterans like many Americans may be treading in rough economic waters. And, many homeowners fear that if they don’t keep afloat, the foreclosure wave could ultimately wash them under. For many VA-eligible borrowers who qualify, relief may be in sight now that new and better conditions have been established by the Veterans’ Benefits Improvement Act of 2008. Sponsored by Senator Daniel Akaka (D- HI), the bill was created to improve Veterans’ benefits, mainly compensation and pension, housing, labor and education, and insurance. The Act, signed by the president into law October 10, 2008, impacts the VA Home Loan Guaranty Program. By understanding these impacts, VA-eligible borrowers who qualify may get the VA refinance loans they need to lead them to clearer financial waters.
VA’s authority to guaranty Adjustable Rate Mortgages (ARMs) and Hybrid ARMs was set to expire this year. Under the new law, this authority has been extended through September 30, 2012. VA program requirements concerning ARMs and hybrid ARMs remain the same. Significantly, and unlike conventional ARMs and conventional hybrid ARMs, interest rates on VA guaranteed ARMs and VA guaranteed hybrid ARMs are limited each year, as for the life of the loans. The difference can mean a substantial benefit to veterans who qualify.
With regards to regular “cash out” refinancing loans, benefits are also enhanced considerably. A cash out refinance occurs when the new mortgage amount is more than the former mortgage amount — giving the homeowner cash out of the equity. Under the old law, cash out loans were limited to 90 percent of their appraised values. Now, regular cash out VA refinance loans can be made for up to 100 percent of the appraised property value.
The maximum loan guaranty amount for certain VA loans closed during the period of January 1, 2009 through December 31, 2011 has been increased under the new law. This change allows the Department of Veterans Affairs to help a large number of military personnel with subprime mortgages (obtained with less-than-ideal qualifications) to refinance with safer, more affordable, VA guaranteed loans. Veterans in financial white water due to high rate subprime mortgages are potentially the greatest beneficiaries of this Act.
Subprime mortgages have never been guaranteed by the VA loan program; however, VA can now help many more veterans with subprime loans by guaranteeing VA refinance loans. Because of the new law, the VA’s maximum loan amount for refinancing loans has been raised. The VA guaranty, previously set to apply toward a loan limit of $417,000, will now be available on loans of up to $729,750 depending on the location of the home for which the VA loan obtained.
The new law, designed to help qualified veterans maintain adequate or suitable housing and to protect veterans who may feel as though they’re on a sinking ship called the SS Foreclosure, can help increase loan-to-value ratios and raise the maximum loan amount available under the VA Home Loan Guaranty Program. When combined with new county-based Freddie Mac conforming loan limits in January 2009, VA’s maximum county “loan limit” may be as much as $1,094,625 ($1,642,037 in Alaska, Guam, Hawaii, and the Virgin Islands). This results in unique county “loan limits” for VA.
Generally speaking, veteran home loans can be easier to get than other conventional loans. First, they do not require private mortgage insurance (PMI); therefore, many VA-eligible borrowers who qualify can and have saved hundreds of dollars monthly. Second, because there is no down payment required, VA home loans make a lot of sense. Third, VA loan qualifications can be less stringent compared to conventional loan qualifications. And, now with the new laws put in place by the Veterans Benefits Improvement Act of 2008, a VA home loan can be even more beneficial to eligible borrowers drowning in debt.
Though VA loans are guaranteed by the Department of Veterans Affairs, they are funded and serviced by approved independent mortgage lending institutions which must ultimately agree to the terms of each loan.
Altogether, the changes under the new law for VA home loans can translate to a tremendous benefit for VA-eligible borrowers who qualify. By understanding all the benefits associated with this new law, veterans might perhaps tread a little easier.
If you liked that post, then try these…
Ineligible Uses for VA Loans by IsaacFDavis on December 17th, 2010
Written by Isaac F.
CO and MA Top Just Released 2013 VA Loan Limits by IsaacFDavis on December 13th, 2012
.
The VA Streamline Refinance Loan: Taking Advantage of Low Interest Rates Could Not Be Any Easier by IsaacFDavis on February 26th, 2009
Written by Isaac F.
Why Don’t More Servicemembers Use Their VA Home Loan Benefits? by vahomeloanguru on November 25th, 2011
Written by Valery Behr, The mystery surrounding the VA Home Loan Guaranty Program is one reason that only a very small percentage of eligible servicemembers and surviving spouses are using their .
Reasons to Refinance with VA Loan by IsaacFDavis on November 17th, 2011
Many borrowers ponder whether to use .
Comments
Powered by Facebook Comments
Thank you for the tips – this is useful information for veterans who are trying to save money in this economy. Wanted suggest a site for info on veterans compensation benefits – veteranslaw.com. Again, thanks for the advice.
Best,
Sam
Are the V.A. home loans available to those of us that are living abroad? And if so What are the requirements or where can I locate them?
The VA will do 100% are the banks willing to do the same 5/3 bank says it will only go 95%
Great questions- I will answer both here.
ARE VA HOME LOANS AVAILABLE TO THOSE LIVING ABROAD?
VA Home Loans are available in the US and territories. The program is not available overseas. However, if you are deployed and you have a spouse in the US that will be occupying the home, you can apply with a VA approved lender for VA financing.
THE VA WILL DO 100%, WHAT ABOUT THE BANKS?
With the recent conditions in the market, many lenders are not offering 100% financing. There are some that are offering it however. If you can take advantage of the VA home loan program it is a great way to get 100% financing for your home.
Hope that helps answer your questions.
To whom it may concern; I am a lender in California, do you know what lenders will do the 100% VA refi? Thanks
ARE THERE ANY LENDERS IN NEW HAMPSHIRE THAT WILL DO THE VA 100% CASH OUT REFINANCING?
I suggest trying a national VA lender like iFreedomdirect- http://www.DirectVALoans.com.
we offer 100% c/o VA financing across the country with MetLife Home Loans. 509-981-8657 P.S.T
ARE THERE ANY LENDERS In Northern Virginia THAT WILL DO THE VA 100% CASH OUT REFINANCING?
I have found that most lenders will honor the 100% cash out refinancing (I’m in CA), BUT only up to the VA county loan limit. If it goes above the VA guarantee limit in your county, then lenders are only offering 90% LTV. Let me know if you find a lender that will go to 100% LTV over the county limit.
I am in Florida, and everyone I contacted will only do VA 100% purchase, but not the refinance. I thought the Veterans Improvement Act was public law. Shouldn’t the lenders be held accountable and follow it? It makes no sense to me.
Are these loans still available for vets.
These loans are still available for Veterans. Usually the lender will determine it’s own guidelines but we have included links to a lender that from our understanding does still offer 100% VA financing.
Ashley, where are the link to the 100% va refi lenders. I’m looking for someone to refi my house with. But I will need 100%.
Well the links are within the text of the article but you can try just going to http://www.directvaloans.com/. I hope that helps. Good luck!
I recently got a call from the Real Estate Mortgage Network and the woman who I spoke to sounded very knowledgeable and convincing. I live in the DC area and really need to refinance. Can anyone give me any insight about this company? I am very wary about the companies out there that prey on individual and promise excellent deals. Thank for your help.
I am refinancing from a non VA loan to a VA loan after 4 months my lender now says they can only go 90%?
Hmmm… Who is your lender? Let me see if we can get more information for you.
what bank will do a 100% va cash out refinance.Thanks
That’s a good question. You can look into some of the links in the article to see if they help at all. Here’s another article that may help, http://www.directvaloans.com/VA_Home_Loan_Guide/A40/VA_Cash_Out_Benefits_Over_Military_Loan.aspx. Let me know if that helps at all. Also, here’s a PDF from the VA related specifically to cash-out refinances: http://www.vba.va.gov/ro/phoenix/RLC/PDF/Cash_%20Out_Refinance.pdf. There are other resources listed in this PDF. Hope this helps. Thanks!
Last I talked to Ifreedom.com and Metlife they only went to 90%. Ifreedom.com said it was because their investor (GMAC) was filing for bankruptcy. I didn’t have the heart to tell him GMAC is owned by Ally. Metlife initially allowed the 100%, but as I got into the application process more their policies changed and they no longer allowed 100% LTV refinance. Are there any other options for Vets to obtain their Congressionally provided benefits???