More Good News For Kitsap County Borrowers (and everywhere else too)
September 19th, 2007 by Mark FlandersGinnie Mae announced on August 27th this year that they would be removing the limit on mortgage loans guaranteed by the Department of Veterans Affairs (VA Mortgage Loans)! The limit previously has been capped at $417,000. The memorandum can be found here. This change became effective September 1st, 2007.
I don’t know how I missed this news when it was first published, and I am still surprised there has not been more media coverage. This is potentially big news for VA borrowers, Loan Officers and Realtors® across the nation. Right here in Kitsap County, this could easily reestablish some momentum in our real estate sales.
What this means to Kitsap County VA Homeowners
If you own a home in Kitsap County and you qualify for a VA mortgage loan, but you thought you could not take advantage of refinancing opportunities because the value of your home is too high, think again. With the loan limit removed, you may be able to take advantage of the historically low fixed rate loans VA offers. In addition, unless the lender imposes an add-on fee for exceeding the $417,000 conforming limit, Jumbo Loan borrowers will be able to acquire terrific low interest rates on very large loans. Imagine having a $750,000 mortgage at a fixed rate of 6.00% for 30 years.
What this means to Kitsap County Homebuyers
Kitsap County VA homebuyers, will no longer be limited to the $417,000 ceiling. If a homebuyer wants to exceed that limit, the borrower will need some cash down payment. VA guidelines stipulate that if the loan is above $417,000, the borrower can finance up to 75% of the difference. In other words, on a $517,000 pruchase, the veteran would need $25,000 (plus closing costs and pre-paid items). This scenario would be over the VA limit by $100,000 so the VA would allow financing to be increased by 75% of that or $75,000. The borrower is responsible for the difference.
What this means for Kitsap County Sellers
Homes for sale above the $417,000 conforming limit, will now be able to be marketed to VA buyers! In the past, with the limitation in place, these properties could not be listed in the MLS as VA. Kitsap County has a very large population of Military families. Sellers in the upper price ranges have not been able to offer their homes to VA buyers unless the buyer was willing to switch away from VA financing.
What this means to Kitsap County Realtors®
Any Realtor® reading this article has already figured out what this could mean for their clients. Their sellers can now offer properties to a larger pool of buyers and their VA buyers can make offers on more expensive homes without the need to switch to conventional or subprime loan programs.
Overall, this is big news. Some questions remain that I have not been able to find answers to yet.
- Will lenders take advantage of this change? (Lenders can, and often do, refuse to participate in available programs)
- Will there be a maximum loan limit set? (Think jumbo and super jumbo loan sizes)
- Will the 25% veteran participation apply to the down payment parameters that lower the VA Funding Fee? (This is the question I really want an answer to)
I will add to this article as the information comes in. You may want bookmark this one and check it for updates.
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That is great. Thanks for the information.
[...] Just a few weeks ago SoundBiteBlog posted an article about VA Loan Limits and Ginnie Mae. In short the article stated that, beginning September 1st 2007, Ginnie Mae has lifted the maximum loan limit cap on VA Mortgages. This seemed like big news to me at the time, yet there still has not been much media coverage on the subject. [...]
This is a great benefit for military families who are trying to buy and those who are trying to sell. More buying power combined with the amazing benefits for vets returning home equals a better chance the housing makret in Kitsap County and the general Puget Sound area will remain solid.
–Michael Sluis
National VA Loan representative
Wells Fargo Home Mortgage
Thank you so much. I had no idea this has happened either. WOW!!!
Wow! This is really HUGE! I wonder why no one has picked up on it before? We could really use a good ‘shot-in-the-arm’ in our market here. And I’m sure this would be BIG news in other markets around the country. Thanks for bringing it to our attention, Mark!