VA Home Loan Act Now Law
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UPDATED: Sep 19, 2012
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President Obama signed the Honoring America’s Veterans and Caring for Camp Lejeune Families Act on Aug. 6, 2012. As its name suggests, the Act will address medical issues related to water contamination at Camp Lejeune, North Carolina. This new law will aid many veterans and their families when it comes to obtaining a VA home loan towards the purchase of a house.
Under the Act, which is more formally known as HR 1627, a surviving spouse of any deceased veteran is eligible for a VA home loan as long as the veteran was eligible for VA disability compensation at the time of death, or if he or she was labeled as totally disabled for a period of time.
HR 1627 will alleviate the fact that the VA home loan program proved to be little more than useless for active service members.
There is a requirement with the VA financing program that calls for participants to immediately move into their home after purchase. This requirement, called the occupancy rule, failed to take into account that some service members might want to purchase property back home while they’re overseas. HR 1627 allows service members on active duty to satisfy the occupancy rule by having a dependent child move into a home with a legal guardian or attorney-in-fact.
The Act also overturns the expiration of VA Adjustable Rate Mortgages (ARMs) and hybrid ARMs. Qualified borrowers can now once again borrow adjustable interest loans from VA home loan lenders.
Previously, VA home loan limits were raised in certain high-cost areas. Congress did not extend the higher limits in 2012 which resulted in a cap of $625,500 for a home purchase. The new law allows higher limits in excess of $1,000,000 for homes that are in high-priced real estate areas through the year 2014.
Finally, veterans may qualify for a funding fee waiver based upon a qualifying pre-discharge disability rating or memorandum rating. A pre-discharge disability rating is a label given to veterans injured in the line of duty. A memorandum rating is an abbreviated rating decision made for a very specific purpose—such as qualification for rehabilitation. Originally, all veterans would have paid a funding fee for a VA home loan.