Exclusive: New Bill Brings Better Housing Benefits for Veterans
By: Guest Contributor: Chris Birk
Earlier this month, President Obama signed a new bill into law with the intent of making much-needed changes to the VA Home Guaranty Program, as well as providing healthcare to the hundreds of thousands of Marines and Marine families that drank contaminated water at Camp Lejeune North Carolina – the Honoring America’s Veterans and Caring for Camp Lejeune Families Act.
While the bill, passed by the House and unanimously by the Senate, has a primary focus to extend healthcare to those affected by Camp Lejeune’s drinking water, it also makes breakthrough changes that provide much needed reform to the VA Loan program, a program that has been in service since 1944.
This piece of bipartisan legislation will provide help in the following areas:
Prior to the bill’s passing, the only way a military widow or widower could receive zero down financing was if their spouse died with a service-connected disability or in the line of duty. Meaning, if their husband or wife died of normal causes, they were not eligible. Today, the VA’s mortgage benefits are now extended to surviving spouses of veterans who had a permanent, service-connected disability for at least a decade before their death.
Before the bill was made law, if a service member serving abroad were to buy a home, only a spouse could fulfill the occupancy requirement. Those who were married military couples and single-parent service members were powerless to buy homes while deployed.
This has now been repealed, ensuring that active duty members can meet the requirements of a new home purchase through a dependent child of the soldier.
The VA Funding Fee and Disabled Veterans
For every purchase or refinance loan that the VA backs, it applies a fee known as the VA Funding Fee. This fee helps fund the program and makes sure that it’s independent of the Congressional appropriations process.
Prior to the bill, veteran borrowers that had service-connected disabilities didn’t have to pay the fee, which is usually financed directly into the loan. But recently, because of delays with the VA’s medical system, many soon-to-be veterans have had to wait months to get an official disability rating after receiving a pre-discharge exam by the VA.
Meaning, if a disabled veteran tried to buy a home with the VA home loan program before then, they would have to pay the fee, which forces some VA borrowers into larger mortgages than they can afford.
The new policy provides that the VA will waive the fee if a future veteran is eligible to receive compensation for disability, without having the official rating.
VA Loan Limits
When veterans lives in one of the more expensive areas in the country, such as California, Hawaii, or the Eastern Seaboard, they lose some of their purchasing power because of lowered loan limits on VA-backed mortgages. The limits dictate the amount a veteran can borrow without having to make a down payment. Last year, the loan cap was reduced from $729,750 to $625,500. The bill brought the caps back up to last year’s levels, which are set to stand until after 2014.
At the end of this year, adjustable-rate mortgages were no longer going to be offered through the VA loan program. Under the Act, adjustable-rate mortgages and hybrid ARMs will continue to be available through the VA.
Chris Birk is a former journalist and the author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.” He is also content development director for Veterans United Home Loans. Connect with Chris on Google+.
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