VA borrowers have the option of applying for a VA Interest Rate Reduction Refinancing Loan on a delinquent mortgage. VA loan rules don’t allow “automatic approval” on these types of loans (where the original mortgage is 30 days or more past due) and the lender must submit the loan application to the VA for approval–but the option is definitely there.
Some borrowers get into trouble on a VA home loan, become past due on their loans, but find a way to correct the problem before it turns into a more serious issue. During that time these borrowers may have investigated their options for VA loan refinancing; anyone who has explored this option prior to the implementation of the Veterans Benefits Improvement Act of 2008 should take some time to re-familiarize themselves with the VA loan rules for IRRRLs on delinquent VA mortgages as there have been several important changes.
For example, VA loan rules have since been changed to remove to “a 90 percent limit on refinancing” according to the VA Lender’s Handbook. “P.L. 110-389, Veterans’ Benefits Improvement Act of 2008, signed October 10, 2008, removed this limit.”
Additionally, borrowers are now directed to another section of the VA loan rules which state that “refinances can now be made up to 100 percent of value, plus funding fee and any energy efficient improvements.” Yet another section was changed to “remove the $36,000 maximum guaranty limit on most refinance loans”.
These are important changes–any borrower thinking of a new VA home loan of any kind should check to see what new features have been added, modified, or removed since the last time they looked into their VA loan options. Public law, VA loan program changes, policy expiration, and other issues can and do change the nature of the VA home loan benefit and program.
The best way to stay on top of such changes is to review VA Loan Circulars as published on the VA official site. You can find these circulars, issued whenever there are important improvements, announcements or other updates, at http://www.benefits.va.gov/homeloans/new.asp.
Do you have questions about VA home loans? Ask us in the comments section.
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