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, which the President signed into law on October 10, 2008.
“These changes will allow VA to assist a substantial number of veterans with subprime mortgages refinance into a safer, more affordable, VA guaranteed loan,” said Secretary of Veterans Affairs Dr. James B. Peake. “Veterans in financial distress due to high rate subprime mortgages are potentially the greatest beneficiaries.”
Veterans can now refinance their home loans up to 100% of the property value. In the past these loans were limited to 90% of the property value and 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.
VA’s authority to guaranty Adjustable Rate Mortgages (ARMs) and Hybrid ARMs will also be extended under this new law through September 30, 2012. Unlike conventional ARMs and hybrid ARMs, VA limits interest rate increases on these loans from year to year, as well as over the life of the loans.
