Jan 3, 2014, 2:40pm HST UPDATED: Jan 3, 2014, 4:32pm HST
Bill Cresenzo Reporter – Pacific Business News
The Department of Veterans Affairs has reduced its mortgage loan guaranty limit to $625,500 from $750,000 for veterans who want to buy a home in Honolulu in 2014, officials say.
The new limit would have negative ramifications for home buyers who are on the verge of signing a contract, but now can’t buy the houses they want, said Honolulu City Councilwoman Kymberly Marcos Pine.
Home-buying veterans may have to come up with larger down payments, said Anders Hostelley, president of Honolulu HomeLoans and a director with the Mortgage Bankers Association of Hawaii.
In fact, on Thursday, a Honolulu HomeLoans client backed out of a loan of around $500,000, Hostelley said, because he could not come up with the down payment because of the new cap.
Hostelley said the reduction is based on sales figures from the Federal Housing Administration.
The Department of Veterans Affairs couldn’t be reached for comment Friday.
The reduction brings Honolulu in line with the rest of the state, but Pine said Honolulu veterans face more housing stress because the median price of a single family home stood at $684,000 in November, a 6.9-percent increase over November 2012, according to figures from the Honolulu Board of Realtors.
Other states have much higher caps. The cap in New York City stands at $978,750. In some areas of California, the cap is as high as $1.05 million.
“The VA and lawmakers in Washington, D.C., should consider the impact these reductions will have on unique real estate markets such as Oahu and take into consideration variations in home prices, incomes and cost of living,” Pine said.
The VA guaranteed 5,292 loans in the state last year, Pine said
“This is an injustice to our military and veterans,” said Pine, who represents a large number of veterans and military personnel in her district.
Hostelley took a more pragmatic approach. He said that while he wished the Department of Veterans Affairs would raise the cap, Honolulu has “had a good run” with the $750,000 threshold.
Home buyers will have to adjust their expectations or produce more cash for a down payment, Hostelley said.
“If you’re not going to come up with the down payment, you’re not going to qualify,” he said.
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