VA Mortgage Loan Changes

VA Mortgage Loan Program Changes

Since World War II, The VA home loan program has helped over 18 million veterans receive government-backed mortgages.  Recently the President signed into law some modifications to the VA home loan program.  This new bill will benefit disabled service members, single-parent soldiers and military widows. The new changes include:

Surviving  spouses of Veterans

Before the change, the only way military widows could participate in the VA no-down-payment program is if their spouse had a service-related disability or died in the line of duty.  As a result of the change, a widow may get a VA loans  if the veteran had a service-related disability for at least ten years before their death.

Single parents and military couples

When applying for a VA home loan, you have to sign a piece of paper saying that the property will be your primary residence and you will be the primary occupant.  Military spouses can take the place of military members serving abroad when signing this paper, but this doesn’t necessarily help single-parent soldiers and married military couples.  As a result of this bill, dependent children will be able to meet the occupancy requirement.  Active service members who don’t have children, unfortunately, will still be unable to meet the occupancy requirements.

Disabled veterans

Every VA loans has a funding fee. This fee is added to the loan amount, and the proceeds to go making sure the program will be self-sufficient and not cost tax payers any money. The fee varies by service, first time or second time use of a VA loan, or a VA streamline refinance.

Borrowers with a VA service-related disabilities of at least 10% have always been exempt from this fee.

Many times, Veterans often have to wait months to get their official  VA disability rating.  Thus they potentially may have to pay the VA funding fee when they shouldn’t have to.  With this improvement to VA mortgage loan program, the VA will be required to waive the fee after the pre-disability exam indicates the individual is disabled, instead of waiting months for the official “disability rating.”

Adjustable Mortgages

While most VA loans are the standard 30-year fixed rate mortgage, adjustable mortagegs were an option. Those ARM loans were scheduled to be cut out of the VA loan program by the end of 2012, but adjustable VA mortgages  will now continue to be available.

Veterans living in high-cost area of the country

Veterans who live in the most expensive areas of the nation were hit hard last fall when loan limits for government-backed mortgages dropped to $625,000 from $729,000.  As a result of this bill, higher county loan limits will be reinstated sometime in 2014.

 

 


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