Veterans with conventional home loans have many options for refinancing to a Department of Veterans Affairs (VA) guaranteed home loan.
"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."
The VA has never guaranteed subprime loans. However, as a result of the new law VA can now help many more veterans who currently have subprime loans.
The new law makes changes to VA's home loan refinancing program. Veterans who wish to refinance their subprime or conventional mortgage may now do so for up to 100% of the value of the property. These types of loans were previously limited to 90% of the value.
Increasing the loan-to-value ratio and raising the maximum loan amount will allow more qualified veterans to refinance through the VA, allowing for savings on interest costs or even potentially avoiding foreclosure.
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