There are many ways in which a getting a divorce can have an impact on VA loans.
Let’s go ahead and start off with the basics.
First, let’s look at a scenario where the VA loan is only filed under the veteran’s name.
The VA loan guaranty is only available due to the veteran’s eligibility for the loan.
After the VA loan is processed, the guaranty will remain with the mortgage even if the borrowing veteran or member of the armed forces stops living there. The only way the VA loan guaranty will be removed is if the loan is refinanced by the former spouse into a conventional mortgage, which will then make the military borrower again eligible for a new VA mortgage.
Jointly held mortgages are a little different from the above process.
The name of each spouse is on the mortgage, and if they both work the couple may qualify for a higher loan amount with their combined income than either would individually.
Only one spouse needs to be a veteran or military service member and eligible in order to get qualified for a VA loan. After the VA guaranty is committed to a mortgage, it is no longer attached only to the veteran borrower.
This is what makes joint mortgages a little tricky when it comes to divorce, especially since few ex-spouses will want to maintain a joint mortgage together. With this in mind, there are a few potential situations that can arise:
- The ex-spouses can sell their property and divide the equity or debt.
- They can designate sole-ownership of the property to one person and then refinance the mortgage into the name of just one borrower.
- If neither ex-spouse can qualify for a mortgage on their own, the original mortgage will remain until the property is sold. In this case, the veteran will not be eligible for another VA mortgage as long as the original mortgage remains.
After the mortgage is terminated, the veteran can apply for a new loan guaranty. Normally, there will not be any change from the original eligibility.
It is critically important that after the divorce a complete copy of the divorce decree and any payments to the ex-spouse are documented.
If you have a VA loan and you’d like to get a VA IRRRL loan (also known as a VA Streamline Refinance), there are also some things you should keep in mind if you are going to get divorced, married, or re-married.
During your regular VA mortgage application process, each of the borrowers whose names appeared on the loan was reviewed by the VA. Since VA IRRRL loans do not require a credit check, you are required to keep each borrower from the original loan on your VA Streamline Refinance.
Unfortunately, there is no way to remove a borrower for a VA Streamline Refinance.
In order to get a new VA loan during or after getting a divorce, you will be required to follow the steps of your first VA loan.
However, if you are getting married, already have a VA loan and decide to get a VA Streamline Refinance, you are allowed to add your new partner to the loan.
A Few Frequently Asked Boise, Idaho VA Mortgage Questions:
Q: How do I apply for a VA guaranteed loan?
A: You can apply for a VA loan with my company who is a mortgage lender that participates in the VA home loan program. At some point you will need to get a Certificate of Eligibility from VA to prove to the lender that you are eligible for a VA loan.
Q: How do I get a Certificate of Eligibility?
A: Complete a Veterans Administration Form 26-1880, Request for a Certificate of Eligibility. You can apply for a Certificate of Eligibility by submitting a completed Veterans Administration Form 26-1880, Request for a Certificate of Eligibility for Home Loan Benefits, to the Winston-Salem Eligibility Center, along with proof of military service.
Q: Can my lender get my Certificate of Eligibility for me?
A: Yes, it’s called Web LGY. Most lenders have access to the Web LGY system. This internet based application can establish eligibility and issue an online Certificate of Eligibility in a matter of seconds. Not all cases can be processed through Web LGY – only those for which VA has sufficient data in our records.
Q: How can I obtain proof of military service?
A: Standard Form 180, Request Pertaining to Military Records, is usd to apply for proof of military service regardless of whether you served on regular active duty or in the selected reserves. This request form is not processed by the Veterans Administration. Rather, Standard Form 180 is completed and mailed to the appropriate custodian of military service records. Instructions are provided on the reverse of the form to assist in determining the correct forwarding address.
Q: I have already obtained one VA loan. Can I get another one?
A: Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior Vet. Admin. loan and disposed of the property you can have your used eligibility restored for additional use. Also, on a one-time only basis, you my hae your eligibility restored if your prior Vet. Admin. loan has been paid in full but you still own the property.
Q: Is the surviving spouse of a deceased veteran eligible for the home loan benefit?
A: The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. In addition, a surviving spouse who obtained a Boise IdahoVA home loan with the veteran prior to his or her death (regardless of the cause of the death), may obtain a Vet. Admin. guaranteed interest rate reduction refinance loan.
If you have any questions about a Boise Idaho VA mortgage home loan feel free to contact us.