If you’ve served in the military, this year ushers in some
big home loan changes to put on your radar.
Veterans and active-duty service members will have more
borrowing power but will pay higher fees for new VA home loans in 2020.
The changes are part of the Blue
Water Navy Vietnam Veterans Act of 2019, which became effective Jan. 1,
2020. Besides extending disability
benefits to more Vietnam War veterans exposed to Agent Orange, the new law
eliminates VA loan limits for borrowers with full entitlement to VA loans. It
also increases the VA funding fee for most borrowers. (The fee decreases slightly
for National Guard and Reserve members.)
VA home loans are a benefit for current and veteran service
members. They have competitive interest rates and usually no down payment
requirement, among other advantages. VA loan limits are the maximum loan amount
the Department of Veterans Affairs can guarantee without borrowers making a
down payment. VA funding fees are one-time fees borrowers pay in lieu of
mortgage insurance to help cover the government’s costs for backing the loans.
If a borrower defaults, the VA repays the lender a portion of the loan.
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