On May 18, new legislation passed the House as part of the 2013 National Defense Authorization Act (NDAA) that would grant military homeowners the ability to refinance their mortgages even if they do not live in the residence at the time.
Thousands of military members have experienced the headache of being forced to PCS or deploy without being able to sell their home. The Fairness for Military Homeowners Act would allow active duty service members to refinance their home loan as long as they have held the mortgage for at least 13 months and are under orders that prevent them from occupying the home.
This could save military homeowners hundreds of dollars a year and potentially thousands of dollars over the life of a home.
The bill is being sponsored by Reps. Duncan Hunter (R-CA) and Susan Davis (D-CA) as an amendment to the Servicemembers Civil Relief Act (SCRA).
“House passage is an excellent first step for this legislation which was brought to our attention by a service member from San Diego," Davis said in a recent press release. "Our nation’s service members should expect the same treatment as any other American when it comes to refinancing their mortgages. The sacrifice of multiple deployments should not include the loss of their family homes.”
While military homeowners can already refinance regardless of whether or not they live in the home, owner-occupancy is usually required in order to receive the lower interest rates.
This is also different from a VA "Streamline" loan, or an Interest Rate Reduction Refinance Loan (IRRRL), that allows a service member to refinance to a lower fixed interest rate or switch from a VA hybrid adjustable-rate mortgage (ARM) to a fixed rate loan. This option requires that you have already used your VA loan on the property you intend to refinance.
Refinancing may result in higher finance charges over the life of the loan.
Unfortunately, with all of the recent controversy over the NDAA, only time will tell what parts of this legislation will get passed.
A VA loan is a mortgage option issued by private lenders and partially backed, or guaranteed, by the Department of Veterans Affairs. Here we look at how VA loans work and what most borrowers don’t know about the program.
Your Certificate of Eligibility (COE) verifies you meet the military service requirements for a VA loan. However, not everyone knows there are multiple ways to obtain your COE – some easier than others.