Get your VA home loan questions answered to have peace of mind.
VA home loans are great options for veterans interested in financing a new home, but the responsibility the loans require may keep some people from exploring their options. Although it may not be easy to ask financial questions during certain personal times, it’s important to understand how unfortunate situations may affect a VA loan borrower.
What happens to the loan if I get divorced?
If a couple who paid for a home with a VA home loan were to get divorced, there are several options for how they can treat the home and their loan. In some cases, if the couple opts for a joint mortgage, they may sell the property and split the equity or debt. Another option is to refinance the loan to a single borrower. Other times, though, neither borrower can secure a loan. In this case, the initial mortgage will stand and the veteran will not be able to secure a new VA home loan until the initial mortgage is paid off or the house is sold. If a couple terminates a joint mortgage, the veteran will be the one to keep the loan.
According to the VA, when property is awarded to the veteran’s spouse after a divorce, entitlement will not be restored unless the spouse refinances the property or pays the loan in full. If both people are veterans, the ex-spouse can also substitute the entitlement.
What happens to a VA loan if the borrower passes away?
If a veteran who received eligibility for the loan passes away before the loan is paid off, the VA cannot guarantee the remaining balance. The surviving spouse or co-borrower will be responsible for it. If there is no co-borrower, the loan will become the responsibility of the veteran’s estate.
What if I can no longer pay my VA home loan?
If the case arises that you have a loan backed by the VA and you can no longer make payments, know that the VA wants to help you find solutions. To avoid foreclosure, borrowers may opt to sell their home, pay the delinquency, agree to a deed-in-lieu of foreclosure or choose forbearance. Refinancing the home is also an option for veterans who may be able to afford their monthly mortgage payments if the amount was reduced.
For more information about handling VA loans during tough times, contact your Regional Loan Center or your VA-approved lender.
Source: www.va.gov
