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WASHINGTON (Oct.24) -- Veterans with
conventional home loans now have new options for
refinancing to a Department of Veterans Affairs
(VA) guaranteed home loan. These new options are
available as a result of the Veterans' Benefits
Improvement Act of 2008, which the President
signed into law on October 10, 2008. "These
changes will allow VA to assist a substantial
number of veterans with subprime mortgages
refinance into a safer, more affordable, VA
guaranteed loan," said Secretary of Veterans
Affairs Dr. James B. Peake. "Veterans in
financial distress due to high rate subprime
mortgages are potentially the greatest
beneficiaries."\VA has never guaranteed subprime
loans. However, as a result of the new law VA
can now help many more veterans who currently
have subprime loans.
The new law makes changes to VA's home loan
refinancing program. Veterans who wish to
refinance their subprime or conventional
mortgage may now do so for up to 100 percent of
the value of the property. These types of loans
were previously limited to 90 percent of the
value.
Additionally, Congress raised VA's maximum
loan amount for these types of refinancing
loans. Previously, these refinancing loans were
capped at $144,000. With the new legislation,
such loans may be made up to $729,750 depending
on where the property is located.
Increasing the loan-to-value ratio and
raising the maximum loan amount will allow more
qualified veterans to refinance through VA,
allowing for savings on interest costs or even
potentially avoiding foreclosure.
Originally set to expire at the end of this
month, VA's authority to guaranty Adjustable
Rate Mortgages (ARMs) and Hybrid ARMs was also
extended under this new law through September
30, 2012. Unlike conventional ARMs and hybrid
ARMs, VA limits interest rate increases on these
loans from year to year, as well as over the
life of the loans.
Since 1944, when home loan guaranties were
offered with the original GI Bill, VA has
guaranteed more than 18 million home loans worth
over $911 billion. This year, about 180,000
veterans, active duty service members, and
survivors received loans valued at about $36
billion.
For more information, or to obtain help from
a VA Loan Specialist, veterans may call VA at
1-877-827-3702 or visit www.homeloans.va.gov |
