It’s official. Included in the Housing and Economic Recovery Act of 2008 that President Bush signed, is Section 2201 that calls for the “Temporary Increase in Maximum Loan Guaranty Amount for Certain Housing Loans Guaranteed by the Secretary of Veterans Affairs”.
In essence, from July 30th 2008 – January 1st 2009, the VA Department will increase their guaranty amount to cover 25% of the greater of the two:
- $625,500 (for Hawaii, Alaska, Guam and Virgin Islands), or $417,000 (Continental 48 states).
- 125 percent of the area median price for single-family residence, up to $1,094,625 (Hawaii, Alaska, Guam and Virgin Islands) or $729,750 (Continental 48 states).
With this temporary increase, here are the new maximum VA Loan amounts for Hawaii that is allowable with no down payment:
- Honolulu County: $793,750
- Maui County: $790,000
- Kauai County: $773,750
- Hawaii County: $625,500 (no change)
This is great news for those VA eligible borrowers who were looking to buy a property above the old maximum of $625,500. Looks like congress – with the help of Senator Akaka, corrected an oversight which initially left VA Loans out of the picture when congress temporarily increased conforming loan amounts for conventional (Fannie Mae & Freddie Mac) and FHA loans earlier this year.
Unfortunately, congress did not make any changes to the guaranty for VA refinance loans. Currently, if you want to cash-out refinance or refinance your current conventional, Alt-A or subprime loan into a VA Loan – the maximum guaranty from the VA remains at $36,000. With a guaranty of only $36,000, most lenders (if not all) will only allow a maximum loan amount of $144,000 on all VA refinances outside of a VA streamline refinance.
With the median home price in Hawaii around $629,000 – a $144,000 maximum loan amount is virtually useless to help those Veterans refinance out or their subprime or Alt-A adjustable-rate mortgage and into a fixed VA Loan.
A Message to Senator Akaka
We need Congress to increase the guaranty for a VA refinance to 25% of the median home price so we can help our Veterans (who probably received misguided mortgage advice when they originally bought their home) avoid foreclosure and refinance out of adjustable-rate mortgage and into a fixed VA Loan.