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Wednesday, January 22, 2020

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VA Mortgage Loans Change in 2020: Fees Rise, Loan Limits Eliminated

VA home loans are changing in 2020. The Blue Water Navy Vietnam Veterans Act removes the borrowing cap in 2020, which in 2019 is $484,350 in most areas and higher in almost 200 high-cost U.S. counties.
The new borrowing rules are linked to changes made to expand disability benefits to veterans exposed to Agent Orange while serving on ships off the Vietnam coast during the war. Previously, benefits were restricted only to service members who had served in-country or on inland waters. The new rules mean that thousands of more veterans and their families will now benefit by having access to disability benefits.

No VA Mortgage Loan Limits in 2020

A VA loan is a mortgage loan that’s issued by private lenders and guaranteed by the United States Department of Veterans Affairs (VA).
A VA home loan allows qualifying veterans to get a mortgage without a down payment. With a down payment of 20% and the average home value in the U.S. approximately $227,000, a VA-backed loan can help buyers save a lot of money. Current rules require homebuyers purchasing a property above the set mortgage limits to pay a down payment of 25% of the difference between the home’s purchase price and the mortgage limit. For example, to buy a property costing $500,000 in an area with the lower limit of $484,350, the down payment would need to be 25% of $15,650 ($3,912.50).
Starting January 1, 2020, VA mortgage loan limits are removed, which will make buying a home easier for many veterans. However, lenders can still impose their own loan limits, and borrowers still must qualify based on the requirements. Therefore, it’s more important than ever for veterans to shop for a mortgage that best suits their circumstances.

Fees for VA Mortgage Loans Increasing

Another major change in January 2020 for VA home loans is that fees are going up.
Changes in VA mortgage fees effective January 1, 2020, include:
  • The fee for first-use, zero-down loans, will be 2.3% of the loan amount, an increase from 2.15% for regular military in 2019. The fee for subsequent use loans will be 3.6% of the loan amount, an increase from 3.3% in 2019. These fees will stay in place for two years, return to current levels from 2022 to October 2029, then drop even more.
  • Fees will be the same for regular military, National Guard, and Reservists. Unlike 2019, fees will not be higher for National Guard and Reserve members.
  • Active-duty service members who received a Purple Heart will be exempt from the funding fee.
The increase in fees and the removal of the loan limit are changes made by the VA and Congress to raise money to offset the cost of the disability benefits for Vietnam veterans and their children. Agent Orange exposure has led to long-term health problems for both veterans and the children that they had after exposure. Illnesses associated with exposure to Agent Orange range from Hodgkin’s disease to non-Hodgkin’s lymphoma to type 2 diabetes.
Moreover, the overall changes to VA mortgage loans in 2020 are expected to be very helpful for veterans, for which we are very grateful.

Pinellas County, Florida is the second-fastest-growing luxury market based on sales growth. The county is also the fifth fastest-growing luxury market based on the growth of million-dollar sales.

A study from revealed that Pinellas County, Florida is the second-fastest-growing luxury market based on sales growth. The county is also the fifth fastest-growing luxury market based on the growth of million-dollar sales.
The Luxury Home Index examines 82 luxury counties across the U.S., the majority of which are in California, with counties in various other states across the country. The index studies “yearly movement in the entry-level luxury price boundary, defined as the top 5% of all residential home sales in a given market for the past 12 months”. Several other Florida counties feature in the list include Duval, Miami-Dade, Broward, Monroe, Walton, and Collier.

#2 for Year-on-Year Growth

Year-on-year growth for Pinellas was recorded at 15.5% in April this year. It was beaten by Summit, Colorado, with a growth of 19.9% and a luxury sale price of $1,829,000. Despite the rapid growth, Pinellas County remains one of the least expensive luxury markets in the top 20 fastest growing luxury markets based on sales price growth. The average luxury (top 5%) sales price entry point in Pinellas County for April 2019 was $743,000. Only Maricopa, AZ and Sacramento, CA had a lower luxury sales price.
However, the luxury sales price in Pinellas may not stay as low for long. The year-over-year million-dollar sales count was recorded as 52.5%, making Pinellas County the fifth fastest-growing market based on million-dollar sales. Combined with the 15.5% growth in the sales price, things could soon start to change for this luxury market.

Florida Counties with Growing Luxury Markets

In addition to Pinellas County, Walton has also been growing as a luxury market in Florida. The luxury entry point reached $1.69 million, with an increase of 10% year-on-year and an increase in luxury sales of 7.5%. While not growing as rapidly as Pinellas, the growth is still important to note. Sarasota, meanwhile, is declining, after it was the highest performing market for a number of months in 2018. It reached a top growth rate of 21.2% last year, with an entry point of $848,000 in April. However, million-dollar sales are still up 8.1%.
In Miami, a long period of decline in prices has reversed to a small increase of 2.6%. However, Miami is still featured in the top 20 fastest-growing markets based on million-dollar sales.
Monroe, Walton, and Collier counties are all featured in the top 20 most expensive luxury markets, but only Walton has not seen a decline in growth. Monroe has an entry price point of $1.828 million with just a 5.3% growth in the luxury sales price. In Collier, where the entry point price is at $1.62 million, sales prices have dropped 2.6%, despite a 16.8% growth in the sale of million-dollar real estate. The same is true for Duval, a county with a low entry-level into the luxury market at just over $500,000.

California Dominating the Luxury Market

Outside of Florida, California is the top luxury markets based on the report from California counties take eight of the top ten places in the most expensive luxury markets, with the other two filled by Eagle and Summit counties in Colorado. They also count for more than a quarter of the fastest-growing markets based on the sales price. However, when it comes to million-dollar sales, just two California markets are featured: Santa Cruz at number eight and San Luis Obispo at number ten. Half of the most expensive California markets saw a decline in million-dollar sales, with the lowest, Santa Clara, at -17.7%, almost exactly mirroring the growth of Santa Barbara at 17.3%
Across the 82 luxury markets, 9,918 million dollars worth of homes were sold in April 2019. This accounts for a growth of only 0.6% but shows recovery after the 7.5% decline in March. Smaller luxury markets are continuing to emerge, although more markets are seeing declines. Pinellas County is a top performer but entry-level prices remain low compared to many other luxury markets.

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