Help! I'm About to Default on My VA Loan!
No one buys a home thinking they might one day face losing it. But it does happen. For our servicemen and women who are using a VA loan benefit, there are additional programs to help keep you on your feet.
Contact Your Lender
Believe it or not, your lender really doesn't want to foreclose on your house. It's a long and costly process for everyone involved--that's why lenders usually make an effort to work with borrowers on their loan. If you let them know as soon as possible that you're having trouble, they have a number of strategies they can use to work with you:
- Forbearance: Your lender might agree to wait to pursue foreclosure to give time to make up the payments you missed. This might be a good option if you're waiting for a large payment, like a tax refund.
- Repayment plan: Your lender may let you spread out the payments you missed over a longer period. This is going to come on top of your regular mortgage payment, so it's a good option if your financial hardship was temporary.
- Modify the terms of your loan: In this case
- Time to sell: The lender agrees to wait to start the foreclosure process until you have a chance to sell your home and pay off your loan.
- Short sale: The lender agrees to let you sell your home for less than what you owe on the loan.
- Deed-in-lieu of foreclosure: In this case, you could agree to give the deed to your home to your lender. You'll still lose your home, but you won't go through a long foreclosure process.
Ask the VA for Help
It's true that the VA doesn't originate your loan, but they still don't want your VA loan benefit to turn into a burden. They can talk to your lender for you to try to work something out, so be sure to call them right away. But don't worry if you forget--the VA will be notified if you're more than 60 days past due on your loan.
Remember, the VA can only help you out if you have a VA loan. If you have a conventional loan, they can't get involved. But you can always call the Department of Housing and Urban Development for foreclosure avoidance help.
Active Military Resources
If you're having trouble paying your mortgage while you're called up to active military or deployed, you might be able to get relief from the Servicemembers Civil Relief ACT (SCRA). The act can help lower an interest rate or prevent foreclosure for up to nine months after you've served. The act can help you with a lot of other debts as well, including credit cards and cellphones. Be sure to contact your VA office to get more details.
Financial hardship can be a stressful time. Just remember there are programs and people that can help you keep your home or avoid the foreclosure process.
Still have questions? Get the facts about VA loans.