Mortgage Industry News & Advice

VA Loan Eligibility and Divorce in Texas

One thing to consider when getting a divoce in Texas is what will happen to your VA loan.  There are many ways in which a getting a divorce can have an impact on VA loans for both purchases and refinance.

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 loan 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 loan 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 loan 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.

About the Author

About the Author: Leesa Sandoval is a Senior Mortgage Originator with HomeBridge Financial Services, Inc. She has over 10 years of experience in the industry and is consistently ranked as a top producer. Initially specializing in investment, builder and jumbo loans now has added a renovation niche to her product offerings. With the changes in the industry and most recently the perfect home going off the market quickly this niche is serving her well. The renovation products include FHA 203k full and streamline, Fannie Mae HomePath and HomeStyle renovation loans. Leesa was the #1 Renovation lender for 2011 and 2012, as well as listed as a Top 200 Mortgage Originator for 2012 by Mortgage Executive Magazine. Accolades aside, her top priority is ensuring that her clients find the perfect home loan to fit their needs. She prides herself on top notch customer service and will work hard for each and every client. So if it is a renovation loan or a traditional product (FHA, VA, Conventional, Jumbo, USDA) let Leesa and her team help you secure your dream home today! Contact Information: Direct: 972.725.9110 Cell: 214.202.0491 Email: lsandoval@sandovalteam.com Website: www.203krehabnow.com .

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