Hawaii VA Loans

If you’re anything like me, you’ve been hearing about the declining dollar everywhere. I was even in McDonald’s last weekend and it was on TV there. What happened to good old American football on a Sunday morning? Talk about the declining dollar is on the radio when I drive into work…and when I drive home. Sometimes, I feel like I’m listening to chicken little (of course sometimes I think I should just turn on some music). That got me to thinking, “is the sky really falling?” So, I did some investigating.

Here’s what I found out:

There can be good and bad implications of the falling dollar, I guess it all depends on your perspective, or the rules of economics (whatever they may be…).

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Earlier this year Congress & President Obama signed into law the American Recovery and Reinvestment Act of 2009. This bill, enacted to help stimulate the battered economy, included a tax credit of up to $8,000 for First-Time Homebuyers, replacing the old $7,500 tax rebate program.

According to industry reports, first-time homebuyers now account for more than one-half of all home sales. It’s obvious that this tax-credit, as well as historically low interest rates, are providing huge incentives to potential home buyers who were previously sitting on the fence to now make a move. In addition, those who were not interested in buying a home in this market, are seriously reconsidering with these new incentives dangling in their face.

Now before you rush out and start applying for a mortgage loan, here are 5 important things to know about this $8,000 First-Time Homebuyer Tax Credit:

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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:

1. $625,500 (for Hawaii, Alaska, Guam and Virgin Islands), or $417,000 (Continental 48 states).
2. 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).

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Recently, congress came together to put together the economic stimulus package and in affect, temporarily raising the conforming loan limits in high cost areas. What did this do for people in Honolulu, Hawaii? Essentially raise the conforming loan limits from $625,500 to $793,750 for a one unit property. Unfortunately this increase limits will only affect Fannie Mae, Freddie Mac and FHA loans - not VA-backed loans.

Why did VA get left out on this? Well, according to House Veterans Affairs Committee Chairman Bob Filner, (D - CA), “I don’t think (the plan drafters) understood the situation” - specifically that lawmakers probably assumed that VA loan limits would automatically increase along with Fannie and Freddie limits.

This oversight caught the attention of Hawaii Senator, Daniel K. Akaka (D-HI), Chairman of the Veterans’ Affairs Committee, and on March 14 he introduced legislation to rectify the oversight and raise the maximum guaranty for veterans’ homes.

Here’s a copy of Sen. Akaka’s floor statement introducing the bill:

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