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01 Dec 08 VA Mortgage Loan Update

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 (PL 110-389), which the President signed into law on Oct. 10, 2008. Veterans with financial hardships due to increasing high rate sub-prime mortgage loans are potentially the greatest beneficiaries. VA has never guaranteed sub-prime home loans. However, as a result of the new law, VA can now help many more veterans who currently have sub-prime mortgage loans.

The new law makes changes to VA home loan refinancing program. Veterans seeking to refinance their sub-prime or conforming mortgage loans may now do so for up to 100% of the value of the property. These types of mortgage loans were previously limited to 90 % of the value. Additionally, Congress raised VA’s maximum loan amount for these types of mortgage 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 guarantee Adjustable Rate Mortgages (ARMs) and Hybrid ARMs was also extended under this new law through Sept. 30, 2012. Unlike conventional ARMs and hybrid ARMs, VA loan imits interest rate increases on these loans from year to year, as well as over the life of the loans.

For more information, or for help from a VA loan specialist, call VA at 1-877-827-3702 or go to

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