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.
Adjustable Rate Mortgages, ARMs, are a scurge and should be outlawed, never to be seen again. These do not help our military brethren to a "secure" home loan. You should be ashamed to offter this nonsense. JTyner, former U.S.Navy Hospital Corpsman, 61-65.
ARMs are a financial tool to be used only in specific circumstances by informed, knowledgeable, disciplined borrowers. They are not to be used by malcontents and wannabes to gain temporary access to a champagne McMansion on a beer income.
Use an experienced real estate agent who can refer you to a trustworthy lender (or vice versa) , heed their advice and enjoy the benefits of legitimate home ownership.
L/CPL Me USMC '63-'67
I agree with you, JT. And SoSue only makes your point: that lots of unsophisticated folks (some wannabes maybe, but malcontents?) use the ARM because not all agents are trustworthy. (Having worked in a top-selling real estate office as a secretary when I was a college student and having witnessed agents' used-car salesman machinations firsthand, I would say FEW are trustworthy.) I think SoSue has an agenda. And perhaps a Realtor's license?
Your opinion JT is just that, an opinion. The thought that arm’s should be outlawed is quite frankly, absurd. As it was explained in the article, an arm is a good strategy for shorter time periods on loans which can save some 30-40% on interest rates. If an arm can save a homeowner 10k over that three years, and the homeowner sells the property thereby satisfying the morg. loan, then the homeowner has successfully saved 10k, improved his/her credit scores and resided in a home of their choice. Usually problems occur with arms when those who choose them end up failing their objective by simply not following their initial plan usually by changing key issues such as not selling in three years. This type of loan is for those who are disciplined and realistic.
I agree with JT … the ones that get hurt have nothing to do with whether they are disciplined or not, or whether theey stick to the plan. How does one stick to the plan when the economy turns up-side-down like it is today and buyers are scarce to non-existent for your home?? The only one that ends up losing is the poor sap who thought the hosing market will be just as good 3 years from now as it was when he closed.
Exactly my PLan. 5 Year ARM – move in 5 years. Market drops like a rock in the year I want to move. Now I am trapped underwater. Funny think is, no matter what mortgage I would have got, same thing would have happened. Good news though: although I can't sell, my ARM interest rate has dropped to 3.25 and at least I am paying off principal.
ARM is a poor option. But if you need this crutch to get in a home, over time you will pay for it! After rates start to climb w/the payment then you have to re-finance & roll NEW costs into you mortgage, then what have you gained?
A fixed rate is the way to go hands down!
If a service member knows that he or she has a high probability of moving in 3 years or less then maybe the most prudent thing to do is not buy a home and rent instead. The majority of people who finance using an ARM do so because they can qualify for a more expensive house. Then when the adjustment period comes many of them find that they cannot afford the higher payment. A fixed rate loan is much more predictable and would probably save them the most during the term of the loan since historically interest rates tend to go up not down. Stay away from ARM's unless you want to risk losing an ARM and a LEG.
They seemed to have improved things for everyone except those Veterans that served many tours in Iraq and Againistan. My son-in-law has been there 6 times and is due to go back for a 7th tour in July of 2013. During all these deployments the housing industry went to hell in a handbag. His home is now worth less then he paid for it and VA refuses to give him a loan to refinance because he has no equity in his home. These service mambers really need your help. Please come up with something to help these service members to refinance their homes and try and get out from under this debt.
I'm a 20yr retired vet, and after reading your comment, it sounds to me like the value of your son-in-law's home may be low because he has not been there to keep it up because of all of his deployments back to back. So this simply means that once a vet/homeowner buys a home through VA, he and or his family need to make sure that it's well kept to include proper maintenance when it needs it. This problem he is having with the value of his home has nothing to do with the Housing Industry, Govern.,or The VA. Soooo I'm just saying….
That is the craziest thing i have ever heard. I Bought a piece of property and had a house built for 220k. After i buult a large Garage and landscaped the entire yard. 2 years later I get orders to move from west coaast to east coast… In two years my house went from 220k to 92k. the market becuase of short sales and repos completely crashed the value of surrounding homes simply because other home sale greatly affect the appraisal of another home which is what crashed the market to begin with. and what was the major cause 3,5,7 year ARMS. which i agree with should be outlawed or higher restriction placed on them.
Ed, Are you his neighbor or something? Go help him ou and cut his grass so his home value will go up 20K!! Give me a break, watch the news…back to the subect…
I totally understand your point V…Strange thing with my mortgage is that ,,,I'm at 6.5 and could get below 4 right now. I cant refi even with the same company because of equity…heck they hold the note !! Someone please xplain that to me….my credit score is above 720BTW..
Stop trying to Refi if your home is under water, because you will be out of luck. The mortgage companies are not just going to through their money away. What you need to do is ask your lender if you can modify your existing loan, if approved there is a minor fee mine was $318 nothing like the fee of a refi. This is a fed sponsored program, so the mortgage company and you don’t lose everything.
You can find Information at http://www.MakingHomeAffordable.com
We bought a home in Oklahoma during the 80s. My husband's secretary, a civil servant, bought our home and assumed the VA Loan. Her husband was also a government employee. You would think this to be a good risk in assuming our loan. No. She did not pay for long and the house went back to VA and was auctioned off for $20,000 less than it was worth. We gave all we had which was $5,000 to hold onto that house. Come to find out, she was jumping from one VA home to another and living "free" on the coat-tails of our military. She was questioned by OSBI as they finally caught on to what she was doing. She was also involved in drug running. I often wondered what happened to her. VA waived our paying the $20,000 back due to us hiring a lawyer and the documentation we had to prove the scandel we and other active duty military were going through with this one husband and wife team. We lost our VA home loan benefit to a criminal. I think in certain situations or over time some veterans should be able to use this benefit again. The only way we can use the benefit again is to pay the $20,000 back to VA.
Hi Zappy,
Check again, you should be able to use your home loan benefit amount, but, not the full $417,000. You may be able to owe the $20,000.,and still get a home loan for half the 417k. You also can start making payments on the $20,000.,and this will increase your home loan buying power accordingly. Just call the home loan department with your previous VA home loan information. They will give you all the facts and figures. Hope It works for you.
I DID THE SAME
I’m just wondering what is the qualification for receiving a Va home loan. I have tried before and was decline because my credit score was not high enough. The Va says that everyone will be approve but that not accurate, I am medically retired and receives 90% disability and still rent my home. The frustratio for me is that I’m paying someone else mortgage ,when I should be paying my own mortgage. “Can someone please guide me in the right direction”. The three years of paying rent could have gone into the equity of my own home. Concerned Veteran!!!
Qualifications are different depending on where you go. I’m a real estate agent in TN and we qualify people who are 620 mid credit score and higher. However, your debt to income ratios also have to be in line and you can’t have any late payments (late generally meaning over 30 days) within the past 12 months. Your disability is considered income (I say this because a lot ofpeople are discouraged to find that BAH from the GI Bill is not income because it isn’t guaranteed). Find a good Realtor and Lender to help you, I always recommend using a lender who is local.
Qualifications are different depending on where you live. I’m a real estate agent in TN and we qualify people who are 620 mid credit score and higher. However, your debt to income ratios also have to be in line and you can’t have any late payments (late generally meaning over 30 days) within the past 12 months. Your disability is considered income (I say this because a lot ofpeople are discouraged to find that BAH from the GI Bill is not income because it isn’t guaranteed). Find a good Realtor and Lender to help you, I always recommend using a lender who is local.
Areal, I live in TN too and I'm trying to buy my first house through the VA. We, my wife and I were told that unless we had a certificate of eligibility no realtor would talk to us. If we could possibly talk I could use any and all help. Thanks in advance.
getting a certificate is an easy process. Contact the home loan center of VA and get it. If you need assistance go to your local VFW, american legion for help. All that is required is a statment of service if you are still in or a copy of your DD-214. But i also agree with her a 620 credit score or higher is required. VA will not touch you without that.
Ju, your first step is to obtain a certificate of eligibility. You can do that by contacting your Regional Loan Center (http://www.benefits.va.gov/homeloans/rlcweb.asp) or by receiving assistance from a VA -approved lender, who in most cases can obtain your COE in just a few minutes. Once you prove eligibility, you will then have to qualify. That's where your credit score comes in. Again, if you contact a VA-approved lender, they have the ability to see if you pre-qualify for a loan based on a few factors, including credit score. Here's a link to a good article about obtaining your COE with lender assistance that may help you. Good luck and thank you for your service.: http://www.directvaloans.com/VA_Home_Loan_Guide/A…
I also have tried to get a V A loan to have my own home Was told my credit score was to low by 3 points . It just doesn,t make sense to pay high rent when it could be going towards my own place. The payments would even be lower than what I am paying now . Would be nice if a lender would give a lot of us a break.
If you were only 3 points too low, the lender should have been able to advise you how to raise it or do a rapid rescore. I have people who are 40 points low get their stuff fixed in as little as 2 weeks. Try a different lender, generally mortgage brokers are more lenient with their qualifications than traditional banks and credit unions.
How is that, areal? I was told my scores were good and my income leve more than enough for the amount of VA loan I applied for. The mortgage company said that the old stuff on my report keeped it from an automatic underwrite and that a manual underwrite was not approved.
Katherine: Your best bet is to contact a VA -approved lender — many of the big banks don't understand the process/guidelines for a VA home loan and will not work with the veteran. Here's an article on how credit is not the only factor in determining qualification for a VA Loan. Good luck and thank you for your service. http://www.directvaloans.com/VA_Home_Loan_Guide/A…
What type of veteran qualifies for a $1,000,000.00 loan? Mine maxed out at $245,000.00 and that was 10 years ago!
Generals
One who wore stars
DRW, I sure don’t, but remember that those who served 25-30yrs may start a very lucrative second career on top if a decent retirement. Spouses income is also a big factor.
DRW, I sure don’t, but remember that those who served 25-30yrs may start a very lucrative second career on top if a decent retirement. Spouses income is also a big factor.
Areal, BAH has nothing to do with the GIbill.
Actually it does, if you’re using the post 911 GI Bill, you get BAH to help support you for as long as you remain enrolled in school Lenders won’t count this as income because it’s not guaranteed that you won’t turn around and drop out of school as soon as you close on the home.
I currently have a VA loan and just got relocated to calif.. Will I be able to use VA loan again to purchase ?
Yes. If you sell the house you have now, you’ll get your guaranty back. If you choose to keep it, you can get a second VA loan as long as your income will support it. However, to carry to VA loans at once, the second loan has to be for a minimum amount. Here it is $144K but idk if that’s nationwide.
no it is not on the west coast it goes up to 450k.
You can get a second loan for a home. There are CAPS in each area of Country. I am in Virginia, CAP is $625k. I own a home already in AL that i paid $252k for. The $252K will be subtracted from the 625 to determine the amount of 2nd loan i can get. So if you buy a house in Va for $400k, you will be coming out of pocket to pay a % of the overage amount of your CAP.
The $1,000,000 Cap will help me get that $400 home without coming out of pocket since i will not be going over my CAP
Cams, you can use your VA loan benefit over and over as long as you restore entitlement. Here's an article with more information or you can contact a VA-approved lender to obtain more info or ask questions specific to your situation. Good luck and thanks for your service. http://www.directvaloans.com/VA_Home_Loan_Guide/A…
Does anyone know the cap for San Diego?
I am a single mother, and soooo glad that dependents can now fill the occupancy rule of primary residence for VA backed mortgages. This opens a whole new door for me and my eldest daughter. I was very glad to have read that.
As for the raised VA Loan amount – shouldn't matter to most of us. One should never purchase what they cannot afford to adequately pay for no matter what geographical region they reside in.
Receiving a mortgage with low fixed-rate of interest will always be my preference. "Steady and stable" is always a good rule of thumb for our finances and will prove less likely to bite you in the butt down the road. The original intentions for choosing an ARM are rarely ever lived out the way they were designed.
I hope others reading my comment will receive this token of wisdom and make wise choices that are more likely to ensure long-term success.
Wishing you all health, wealth and happiness
I agree with you on not over extending into a mortgage. I looked at what we could afford off of only my income and went after that amount. The problem I now have is that the bank orriginally said that I was good and there would be no problems because of my credit scores. Now they said that the zombie debt showing on my credit report from 10 years ago prevented the automatic underwriting and it went to manual and that even with my income level, credit score and credit history from the past 5-8 years they are not wanting to take the risk.
Carol,
Suffice to say-as a 18 year disabled vet -I did very, very well with the va home offerings. While I hear many bitch -complain about what they fail to understand- I applaud you for your very simple common sense approach.
God bless.
Also for all reading this – the va program for funding does work and is generous. Think it through when you buy. It is a very helpfull benefit !
I am waiting for the results of applying for disability. Do I need to wait until I start a VA refi? If I get a VA refi and pay the fees, will I get a refund on the fees if my disability comes through after I have my refi? (I hope this makes sense)
If you are doing a refi on your current VA home it wont matter your disablility. If you are trying to lower your interest rate you dont want to do a refi you want to do a interest rate reduction loan. much cheaper, nothing out of pocket everything is rolled in.
Stephen, under the new law you need only the qualifying pre-discharge disability ratings or memorandum ratings in order to receive a waiver of funding fees. Talk to your VA-approved lender and make sure they are aware of the new laws based on the Camp Lejeune Act.However, as per the VA, a refund is given if the borrower is determined to have met the disability guidelines after the fee is paid.
The ARM offered with the VA is not the type of financial vehicle used in the past which uninformed home buyers were talked into. These are usually a few points below the prevailing rate with a cap on how much it can increase after the fixed period (3, 5, or 7 year ARM); max 5 points over a 30 year based on what you negotiate. Find an experienced VA mortgage broker. Can help save thousands of dollars in the long run depending on your situation.
An ARM with a VA loan does not make much sense. It may drop your interest payment slightly at the beginning but remember that an ARM is adjustable and if you start out with less than normal rates today, in 5 years your rate may possibly and probably will be higher than the fixed rate you can get today. With the low interest rates we presently have, I strongly urge against ARMs.
Rates are so low right now, why use an ARM? Lock in low! And shop around. Get Good Faith Estimates from at least 3 lenders before committing! These lenders have fees for everything and ALL are negotiable.
Gather information and do your homework…be smart, Don't get ripped off!
Thanks for posting!
While you all twiddle away your day quibbling over BS, I just wanted people to know that because of this new law many lenders are offering streamline VA re-financing deals. Just make sure you pay special attention to all closing costs and fees. Logically, if you are not intending to keep your home longer than five years, then an ARM almost always is much lower interest rate and lower monthly payments. But if you are going to keep the house long term or are unsure, lock in these historically low rates while you still can. On the other hand, there still is no relief for Veterans (or anyone else) who have a non-VA mortgage and under water if their loans are not Freddie Mac or Fannie May. This prevents a lot of people from re-financing their homes. In my case, I was stationed in the DC metro area in 2006 and bought a townhouse at the peak of the housing bubble. At the time, the only lenders making these large purchases available, were not Freddy or Fannie… this needs to be fixed so everyone can take advantage of the low rates not just Freddy and Fannie borrowers! That will be all.
I'm trying to figure out what is going on myself. I recently got out of the military service and am under contract for a home being built. I am using an Illinois program called Welcome Home Heroes that works along side the VA loan. The finance institution said my credit score was good and there would be no problems getting the loan. Now that the frame work is done, plumming is ran and the HVAC system 90% installed in the house I get a call from the lender saying that I cannot be approved because even though my credit score is good, and all my payments on credit accounts have been paid on time for the past 5 years and I was only one month behind on a payment 3 times in the past 8 years, there was some stuff that went into collection 10 years ago that I paid in full that is still showing so it had to go to manual underwrite and they are not willing to take the risk with me. I'm trying to figure out how the heck was I able to get this far in building a house if the loan was not approved. I thought a VA loan was to stand behind veterans to assist in securing a loan.
Kevin, it’s possible the lender or the real estate agent can refer you to a different Lender who can help. We have things happen sometimes where the lender’s guidelines change halfway through the process but a different lender may still be able to handle it. But a paid collection from 10 years ago seems an odd reason for denial. Sounds like somebody messed up and they’re giving you a BS excuse that you won’t question.
Thanks for the response so quickly areal. I've had 2 mortgage companies say no to me now. Only the last one gave me a reason. The other asked if I wanted them to persue what they could pre-approve me for. That one said they ran my numbers all the way down to $80,000 and it was saying no (starting at $200,000 at that) so I'm trying to figure out what is going on. My credit score is around 650 and other payments I'm make'n at the moment are less than 15% of my income. So I'm trying to figure out am I in some credit limbo or something where the numbers say I should be approved but yet the lenders are still saying no. It's quite frustrating because the house I am under contract on is about 1/3rd the way through construction now, and this comes up.
Kevin. Hire a Real Estate Lawyer and or go to see a military legal assistance office. Enjoy your new home.
Cam, the current VA loan limit for San Diego County is $518,750.
It is a shame. I am a disabled veterans with a credit score 680, and paying rent for over two years, without missing a payment. I ask leanders iven the Naval Federal Crdit Union, in Jacksonville, Florida. They responded with notations that was not end by credit report. I ask for $60K and was denied. I received $1,147.00 month compensations, and still cannot obtained a home. So, what benefits you are given veterans, when lenders want give them a loan. Remember folks, make sure you vote right. Remember what happen prior to Mr. Obama, became president. I will keep a roof over my head, what about yours….Veteran representative need to do more.
I'm a widow, my husband was in the Vietnam War Am I entitle for a VA loan?
While this new law has opened up the opportunities for widows of deceased veterans, there is very specific criteria that must be met in order for a surviving spouse to be eligible for a VA loan. The easiest way to determine if you are eligible based on your husband's service is to contact a VA-approved lender. A government loan specialist will know what questions to ask you and how to assist you in obtaining necessary documentation. Here's a good link for more information: http://www.directvaloans.com/VA_Loan_Programs/VA_… . Best of luck.
When buying a home consider the property tax. I"own" my home but the property taxes are so high it's looks more like a mortgage.
I recently applied for a loan using the VA home loan. I was told by the Navy Federal Credit Union that I would have to pay the closing costs. I could not afford the closing cost so I was unable to secure the Va home loan.
Submit response as a comment.
Who pays the closing costs is dependent on what the norm for your area is. In my area, the seller always pays the closing costs. It’s best to consult a Realtor in your area who can advise you on what the typical seller concessions are. If you need help finding a good realtor, in your area, I can try to assist with that.
Hi Anthony: In this buyers market, many times you can get the seller to pay the closing costs for you. A good military-friendly realtor working in conjunction with a VA-approved lender should be able to assist you in getting into a home. If you need help, call iFreedom Direct at 800-211-9024 and relay your situation.
ALL THIS INFORMATION THAT I JUST READ IS TOTALLY WRONG. I AM A 20 YEAR ARMY TOTALLY DISABLED VETERAN AND I CANNOT GET THE TIME OF DAY FROM BANK FOR A MERE 25,000 DOLLARS TO FIX MY HOME WHERE I WILL BE WARM IN THIS COMING WINTER. THIS OLD HOUSE IN EASTERN KENTUCKY IS ALL I HAVE. YES I HAD A GREAT LITTLE HOME UNTIL A MORGAGE COMPANY CAME IN AND REMODRLRD THE HOUSE AND WHAT WAS SUPPOSE TO BE A $550.00 PAYMENT WENT TO OVER $1275.00 IN 6 MONTHS WE LOST EVERYTHING AND NOW WE LIVE IN A HOUSE THAT WE VERY CAN AFFORF THE UTILITIES. SO SOMEONE OUT THERE TELL ME HOW A VETERAN CAN GET HELP VA WANT , AND BANKS WILL NOT LOAN AND MY CHAPTER 13 WAS PAID 3 YEARS AGO TO ALL MY CREDITORS.
HELP, HELP SOMEONE
contact your utility company and they can come and help you fix the windows and winterize the home that you are in. Also contact the Va resource center in the area that you are in and let them know your needs as they have local resources that they can tap into to get you the extra help that you need.
I am retiring next month and have pre-discharge disability ratings in hand. My lender absolutely requires a Certificate of Eligibility reflecting 'Funding Fee Exempt', and I cannot get the VA to issue one until after I retire. I am afraid the info in this article is mostly Public Relations nonsense.
Ren, you may want to contact a lender that specializes in VA home loans and understands the current laws associated with the program. A lender that does VA loans day-in and day-out will know how to handle the pre-discharge disability and COE issues you are having difficulties with. Good luck and thank you for your service. Here's a link for more information: https://www.directvaloans.com/department-of-veter…
Not nonsense! In fact, this new legislation was passed in August 2012 effective immediately. Vets who receive pre-discharge disability ratings can use that documentation to receive exemption status. All VA borrowers need to produce a COE to start the loan process. Your lender can likely obtain one for you online in a matter of minutes. The COE application process is set up to implement the new law. Ren, if your lender isn't current on VA loan legislation, then perhaps consider a specialty lender that is. Or, sit down with your loan officer and make a call to your nearest VA Regional Loan Center and have the new law explained to them over speaker phone. That way, you'll both be on the same page. Good luck!
People used to treat buying a home as way to save money. For example, put $20,000 down and you will get that $20,000 plus make a little profit when you sell your house. (Of course, people used to stay in their homes much longer). Now, people use real estate to try and make lots of money faster, thus the ridiculous prices due to speculation. The banks took advantage of this thinking with their illegal lending practices and that's, among other things, why the bubble burst.