President Obama signed The Honoring America’s Veterans and Caring for Camp Lejeune Families Act (H.R. 1627) on August 6, 2012. This act, intended to help those sickened by water at Camp Lejeune, includes improvements to VA home loan benefits available through the VA Home Loan Guaranty Program.
A portion of the new law makes VA loans available to more surviving spouses, provides easier funding fee waivers for disabled vets and helps single and dual-duty parents with occupancy hurdles. Additionally, and at long last, VA loan limits of $1 million are again possible in high-cost areas. Here is a summary of the changes to VA home loan benefits now in effect:
More VA Loan Eligibility for Military Widows
Before the Bill, military widows became eligible for VA loans only they survived a spouse who died while serving or from a service-connected disability. Now, a surviving spouse may be eligible for VA loans if the veteran had been rated totally disabled for a period of time specified under the new law, and eligible for VA disability compensation at the time of death.
Dependents Allowed to Fulfill Occupancy Rule
VA loans are intended to finance veterans’ homes as primary residences. Borrowers must meet VA owner-occupancy rules to qualify for the federally-backed mortgage program. Sometimes, single parents and dual-active couples could not meet this requirement. Under the new law, a dependent of active duty member(s) can live in the home financed with a VA loan in place of the “owner occupant” as long as a dependant’s legal guardian or attorney-in-fact certifies intent.
ARMs and Hybrid ARMs Still VA Loan Offering
Adjustable Rate Mortgages or ARMs can be a great way for borrowers to get an interest rate below the national average for a short time. Homeowners who plan to move within three years are particularly attracted to ARMs. This can include military members who often get relocated. VA ARMs and Hybrid ARMs were about to expire at the end of 2012 due to old legislation. But, as a result of the latest omnibus bill to improve veterans benefits, ARMs and Hybrid ARMs have become a permanent part of the VA home loan program. Qualified VA borrowers can continue to get these loans from VA-approved lenders that offer them.
Funding Fee Waivers Awarded with Pre-Discharge Disability Rating
The VA funding fee is required for most VA loans. However, certain borrowers such as disabled vets and surviving spouses can receive fee waivers after receiving proper documentation from the VA. The new law makes it easier for disabled veterans to now use qualifying pre-discharge disability ratings or memorandum ratings to get VA funding fee waivers. This can eliminate the need for certain veterans to apply for funding fee refunds because they don’t have proper waiver documentation at the time of loan closing.
$1 Million VA Loan Limits – They’re Back!
The Veterans Benefits Improvement Act of 2008 signed by President Bush raised VA loan limits allowed for up to $1 million dollar VA-backed mortgages in some expensive housing markets. Because Congress never approved the bill to extend the higher limits for 2012, the VA had to recalculate its loan limits. As a result, a $625,500 loan was the most the VA would guarantee in neighborhoods within the 48 states — including high-cost military towns like Prince William, Virginia or Aspen, Colorado. The H.R. 1627 law brings the higher limits back, up to over $1 million in the priciest areas, through 2014.
For more information on improvements to VA loan benefits, contact an approved lender.
This post contains only a brief summary of HR 1627 and changes pertaining to the Department of Veterans Affairs VA Home Loan Guaranty Program. For specific details regarding the new law, please visit http://www.govtrack.us/congress/bills/112/hr1627.