Christmas is nearly upon us and I know there are people feeling the pinch. VA real estate loans are an exceptional way to purchase a home at 100% loan to value but they can also be a salvation on a refinance because they also allow refinance at 100% loan to value, even manufactured homes on land. As a veteran, and a VA Home Loan participant in Springfield, Oregon, I believe one of the greatest things the country has done for veterans, is the VA Guaranteed Loan Program.

One of the little known portions of recent housing changes was Public Law 110-389, the Veterans’ Benefits Improvement Act of 2008.

This law does three things:

1. EXTENSION OF ADJUSTABLE RATE MORTGAGE AUTHORITY: VA’s authority to guarantee adjustable rate mortgages (ARMs) and hybrid adjustable rate mortgages (HARMs) was scheduled to expire on September 30, 2008. Section 505 of Public Law 110-389 extended this authority through September 30, 2012. All VA program requirements related to ARMs and HARMs remain in effect.

2. ENHANCEMENT OF REGULAR REFINANCING LOANS: Section 504 of Public Law 110-389 made changes to VA’s regular (“cash-out”) refinancing loans. Effective immediately, the maximum guaranty amount for regular refinancing loans is the same as the maximum guaranty amount for purchase loans. Regular refinancing loans are now available for up to 100 percent of the appraised value of a home, which is an increase from VA’s previous threshold of 90 percent. All other VA program requirements for regular refinancing loans remain the same.

3. GUARANTY AMOUNTS: Section 501 of Public Law 110-389 provides a temporary increase in the maximum guaranty amount for loans closed January 1, 2009, through December 31, 2011. During this period, the “maximum guaranty amount” set forth in this circular should be substituted for the maximum guaranty amount specified at 38 U.S.C. 3703(a)(1)(C), 38 CFR §§ 36.4302(a)(4) and 36.4802(a)(4), and in the VA Lender’s Handbook. Please note that, if a veteran has previously used entitlement that has not been restored, the guaranty amount for that veteran must be reduced accordingly.

Now, I know that with the real estate and mortgage market where it is, people are not going to be standing in line for an adjustable rate mortgage (ARM), even if it is a VA loan.

However, the ability to get a 100% cash out refinance on your home with a VA loan could be very helpful for a number of people. There are some requirements having to do with previously used eligibility, but overall, this should be a helpful tool for Veterans having financial difficulty.

The new law makes changes to VA’s home loan refinancing program.  Veterans who wish to refinance their sub-prime or conventional real estate 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.

Right now, the additional Guaranty Amount, will not make a difference for residents of Lane County on purchases due to the calculations involved for maximum loan amount based on median home price. Still we are at $417,000, a pretty great limit for 100% financing. Again, prior usage, could affect the final amount available. The increased limits will have some effect in Clackamas, Columbia, Deschutes, Jackson, Multnomah, Washington and Yamhill Counties in Oregon and a large section of California and Washington counties.

Now, if you live in Alaska, Guam, Hawaii, or the U.S. Virgin Islands, it is possible you could get a VA loan for 1,641,937.50. You are going to need a down payment with this amount too. Hopefully you are making a bit more than when you were in the military to qualify for this loan. Also, forget about a stated income loan, VA doesn’t do them anyway. LOL

So, as a veteran and a VA lender, come see me for your mortgage needs in Oregon, California and Washington. I will take good care of you. One thing that a lot of veterans don’t realize is that it only takes 3 months of active duty to qualify for a VA loan.

(Small Print): Rates and terms subject to change without notice. Maximum loan amounts vary by state, county, and property type . Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision.

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