Useful VA Loan
Information
More than 29 million veterans and service personnel
are eligible to receive VA loans. The federal
government recently improved the VA loan program,
which makes the program even more attractive to our
nation's veterans. The changes enacted in Dec. 2004
have increased the loan limit to $359,650, tied the
future loan limit to a fluctuating index, and
reinstated VA adjustable rate mortgages (ARMs). The
VA ARMs will feature interest rate adjustments on an
annual basis, which will be limited to a maximum
increase or decrease of 1 percentage point. In
addition, the interest rate increases are limited to
a maximum of 5 percentage points over the life of the
loan.
The increase in the VA
loan guaranty amount comes at an appropriate time for
the nation's veterans. While national home prices
have appreciated nearly 75 percent since 1995, the VA
guaranty amount has only experienced one increase of
approximately 18 percent since that time. The U.S.
national average purchase price for a single-family
home reached $264,540 in October 2004, according to
figures released by the Federal Housing Finance
Board. This figure is more than 10% over the maximum
that lenders were previously willing to provide for a
VA loan. With the new VA loan guaranty increase, most
lenders will be willing to loan a maximum of
$359,650, which indicates that more veterans will now
be able to afford a home at the national average
purchase price.
