• The maximum guaranty loan-to-value (LTV) for a cash-out/regular refinance has increased from 90 percent to 100 percent. Borrowers may now get a cash-out refinance loan for up to 100 percent of the appraised value of a home.
• VA adjustable rate mortgage (ARM) and hybrid adjustable rate mortgage (HARM) programs are extended through September 30, 2012.
• The maximum guaranty for refinances also increased from $36,000 and is now the same as the maximum guaranty for purchase loans. The amount of the guaranty will depend on the location of the purchase transaction.
• The maximum amount the VA will guarantee has been extended until December 31, 2011. The guaranty amount varies depending on the location of the property but may reach up to 175 percent of the Freddie Mac conforming loan limits.

 

 

Housing in higher-cost regions can be more affordable to borrowers because the maximum amount the VA will guarantee is extended until 2011. The increased loan limit is $729,000 in most areas, yet the maximum amount can reach $1,094,625 in some counties, and in Alaska, Hawaii, Guam and the U.S. Virgin Islands it can go up to $1,641,937.50.

Another improvement in the bill is that it extends the VA’s authority to guarantee adjustable-rate mortgages. These mortgages typically have lower initial interest rates than fixed-rate mortgages, which help families who move frequently attain affordable housing. For those who currently have riskier loans, the increase in the maximum guaranty for regular refinances decreases the equity requirement and gives them the chance to refinance into safer, more affordable loans that are backed by the VA.