News, updates, and explanations to keep you informed.
How to Avoid Default or Foreclosure on a VA Mortgage
When a first time home buyer applies for a VA home loan, missing mortgage payments, going in to default (or even foreclosure) is the furthest thing from the buyer's mind. But in the same way a good VA borrower prepares early for that loan application by researching credit scores and repairing any glitches on credit reports and making sure the financial house is in order, some advance research on preventing VA loan default or foreclosure is an excellent idea.
There's no defense like a good offense; a veteran borrower may have no financial worries today or even tomorrow, but the best protection against default and foreclosure is knowing what resources are available and what actions can be taken before things get to the breaking point with a VA mortgage.
Do you know what options are available should you get into financial trouble down the road and have trouble making mortgage payments? What if your spouse or co-borrower loses a job? What if you lost yours?
When unexpected financial difficulties come up and prevent you from making your payments on time, call the Department of Veterans Affairs at (877) 827-3702. VA loan specialists are trained and ready to help you save the VA home loan.
The VA has several options to explore, including an arrangement with your lender called "special forbearance." In these cases, the lender agrees not to foreclose on the home and give the VA borrower extra time to make up missed payments.
One situation that could justify special forbearance is when the borrower is waiting on funds such as a tax refund or even a re-enlistment bonus. An amount large enough to put a serious dent in the delinquent loan amount would be enough to justify the lender to initiate special forbearance if the lender is willing to work with you.
Other options include loan modification programs where the delinquent amount is added to the loan balance. In these arrangements the overall loan payment is recalculated to establish a new payment plan.
Another option is a repayment plan to pay off the delinquent amount without modifying the original VA home loan. There are many avenues to consider before allowing a VA loan to lapse into default or foreclosure. The key is to act quickly to prevent a bad situation from getting worse.