Veteran Benefits Improvement Act

President Bush signed the Veterans Benefits Improvement Act of 2008 into law on Friday, October 10, 2008. There are four housing provisions in the bill that pertain to Veterans and active duty members who are homeowners or potential homeowners. These changes are major improvements in the bill: Not only are they a great step toward reducing the number of foreclosures, but they give those who were subjected to subprime loans the option to refinance into safer loans. The VA implemented these changes as of October 16, 2008, and they should be considered when taking and processing VA Loan applications from now on.

Improvements to the VA Home Loan Program:

• VA adjustable rate mortgage (ARM) and hybrid adjustable rate mortgage (HARM) programs are extended through September 30, 2012. The VA's authority to guarantee these programs was previously set to end on September 30, 2008.
• The maximum guaranty loan to value (LTV) for a Cash Out (regular) Refinance increased from 90% to 100%. Borrowers may now get a Cash Out Refinance Loan for up to 100% of the appraised value of a home. This is the only change in regular refinances.
• The maximum guaranty for refinances also increased from $36,000, and is now the same as the maximum guaranty for purchase loans. The amount of the guaranty will depend on the location of the purchase transaction.
• The maximum amount the VA will guarantee has been extended until December 31, 2011. The guaranty amount varies depending on the location of the property but may reach up to 175% of the Freddie Mac conforming loan limits.

These provisions are great news for the VA Home Loan Program. Housing in higher cost regions can be more affordable for borrowers because the maximum amount the VA will guarantee is extended until 2011. The increased loan limit is $729,000 in most areas, yet the maximum amount can reach $1,094,625 in some counties, and in Alaska, Hawaii, Guam, and the US Virgin Islands, it can go up to $1,641,937.50.

Another improvement in the bill is that it extends the VA's authority to guarantee adjustable rate mortgages. These mortgages typically have lower initial interest rates than fixed rate mortgages, which help families who move frequently attain affordable housing. For those who currently have riskier loans, the increase in the maximum guaranty for regular refinances decreases the equity requirement and offers the chance to refinance into safer, more affordable loans that are backed by the VA.

Please note that although the VA will allow 100% VA Refinances, most lenders will not. Unfortunately, at this time VA Mortgage Center.com does not have a relationship with a lender that will go up to 100%.

For complete information please visit the following:

Department of Veteran Affairs or Veterans Benefits Administration Public Law 26-08-19.

Improving your credit rating is the first step to a healthier financial life, and it will get you on the road to homeownership. Once you've taken this step your credit rating will steadily increase to the point where you can get a more favorable loan at a reasonable interest rate.

See a related article: Manufactured Homes and the VA Home Loan Program

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