VA to Halt Adjustable Rate Mortgages

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Unless Congress extends the Department of Veterans Affairs (VA) authority to guarantee adjustable rate mortgages (ARMs) and hybrid adjustable rate mortgages (HARMs), these loan types will expire on Sept. 30, 2008. Lenders have been told to not accept applications for VA-guaranteed ARMs and HARMs after Sept. 30, 2008. ARM or HARM applications dated Sept. 30, 2008 or earlier may be processed so long as the loan closes within a reasonable time and satisfies all other VA program requirements. This will effectively end veterans access to VA-guaranteed adjustable rate mortgages and will limit them to fixed rate mortgages. Fixed rate mortgages offer greater stability for the borrower, but normally carry a higher interest rate.

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