As the housing market tries to turn itself around amid declining home prices, tax credits and a continued vice grip on credit for borrowers, the VA Loan has managed to ride out the mortgage mess for Fiscal Year 2009 and looks to post its best numbers in years.
In fact, through April, 153,292 VA Loans had been originated according to the Department of Veterans Affairs Home Loan Guaranty Department. That’s already more than the amount of VA Loans that were originated in all of FY 06 (142,700) and 07 (133,240).
Mark Bologna, director of the VA Home Loan Program, cites the surge in VA Loans to the refinance boom and the general attraction of the VA Loan – no down payment. Which, given the market, as Dean Eckes from the valuation office at the VA Office in Phoenix aptly put it, “the VA Loan is the only zero down game in town.”
Another major factor that has helped the VA Loan is the increase in VA Loan limits, which is generally $417,000 for most counties across the country. Now, for those folks in high cost counties in states like California, Connecticut and Virginia among other states, you can find VA Loan limits as high as $1,094,000, making the VA Loan a more suitable product in those places when as little as two years ago, a VA Loan would’ve been unthinkable because of the loan limit.
California is a good example of how the increased loan limits have made VA viable there. Through March of FY 2009, 10,901 VA Loans had been originated versus 7,725 for the entire FY 2008.
Bologna projects VA Loan originations to finish somewhere between 250,000 to 280,000 for FY 2009, as the refinancing boom starts to wane, yet the first-time homebuyer tax credit continues to bring buyers out. And the VA Loan is very popular among first-time home buyers.
The VA Loan, which has plenty of critics and is widely considered cumbersome and lengthy to close when compared to other mortgage products, continues to plod along at a respective clip as it maintains a pertinent presence in today’s muddled mortgage market.
I have also seen an increase in VA loans this year in Wisconsin. The VA loan, along with the Rural housing loan, are the only two mortgage loans available that allow 100% financing. Which makes sense why their would be more loans closed this year, then the previous years.
I agree with Joshua. Considering the current state of the economy, it is not much of a surprise that VA loans are doing so well since borrowers can take out the cost of the home. Still, we should keep in mind that one of the reasons we got here is because too many people were taking on loans they couldn't really handle. Hopefully, we aren't continuing this trend.
I support this great benefit for veterans which is not new, yet like the increase in FHA lending it increases the role of Government in the economy.