Dealing with a divorce can be emotionally draining. There’s the possibility of losing one of the most precious things you have, your house. It is a difficult circumstance but with the right information, you may be able to deal with it better.
In a divorce, the non-military spouse will lose the right to the VA loan. Because the
VA eligibility is exclusive only to military members, the VA loan will stay with the military spouse. The non-military spouse ‘became’ entitled to the benefit ‘by association.’
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How does the non-veteran ex-spouse keep the VA benefit?
As long as the veteran keeps an active participation, the non-veteran ex-spouse may avail of the same benefit. The non-veteran ex-spouse can keep the home on VA financing for as long as veteran remains on the loan. This means that the veteran will still be obligated and be held liable to pay it off.
Will the veteran still be able to buy a new home?
The answer is yes. As to the use of the VA loan; not a definite yes. If the veteran allows the ex-spouse to live in the existing house and plans to buy and live in a new one, the veteran cannot use VA financing. The veteran would need to find another mortgage financing for the new property.
The non-military ex-spouse has to refinance the mortgage using a non-VA program in order to keep the house. Then, the military member can buy another property with a VA loan. If it is the veteran who wants to keep the house, he/she can choose to
VA refinance the mortgage and remove the non-veteran ex-spouse from the loan. However, the veteran has to make sure that he/she can afford the home on his/her own.
Selling a home can be a win-win.
One way to deal with a VA home is to sell it. Once it is sold, both parties can divide the equity (or debt) into their own terms. The military member can then use the VA program to purchase a new home once the previous house is sold.
It is a big challenge to deal with these situations in life. Something as serious as this needs an expert opinion, in fact, legal opinion as well. Talking to a VA representative, a lawyer, and your lender will help you get to see a better picture. Talk to someone who has dealt and assisted many others in the same situation. These people will be happy to guide you through.
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