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Information on Modifying a VA Loan

The VA has many programs to help veteran home owners retain their property when they fall on hard times. For those veterans who have used the VA Home Loan Guarantee Program, the VA offers the opportunity for veterans in a hardship situation to modify their loans. The problem is that many lenders have continued to modify loans for veterans in need even if the veteran could still not afford the new loan terms. The VA is sympathetic to those veterans whose circumstances change and are forced to find more affordable living conditions. Those lenders that modify a loan for a veteran who is still unable to afford to keep their home even after the modification are breaking the VA regulations for modified loans, and are hurting the veteran at the same time.

Some of the reasons the VA believes lenders have been modifying loans that should have been terminated are:

• The lender does not properly evaluate the borrower's credit. If the veteran is way over their head in debt in other areas, chances are that they can not afford even a modified payment.
• The lender allows the borrower to take a loan for too much money. If the veteran borrows more than the house is appraised for in order to pay for the costs associated with modifying their loan, then their payments are going to increase and the veteran will be deeper in debt.
• The lender increases the interest rate as a result of bad credit or going rates at the time of modifying the loan. This only increases the payment for the veteran and most loans that are modified at an increased interest rate are eventually foreclosed on.

All of these are examples of how lenders have modified loans for veterans in order for the veteran to avoid foreclosure, but in the end the veteran only ended up more in debt and went into foreclosure anyway as a result of their circumstances. In order for a modified loan to be worth it for a veteran, the veteran must:

• Have had a temporary hardship that they have sense recovered from. For instance, if the veteran lost their job and were unable to make their mortgage payments for a few months, but have gotten a new job making at least the same annual income, then a modified loan may work for them.
• Get a modified loan for payments at or lower than their current mortgage loan percentage rate. If the interest rate goes up, monthly mortgage payments go up.
• Have some equity in the home. Modifying a loan has costs involved that can be financed into the mortgage, and if there is sufficient equity in the home then this could be an affordable solution.

It is important for veterans to keep in mind that foreclosure is not the end of the world. Yes, many people will do anything to keep their home, and some circumstances allow for this, but sometimes it is more costly for you and your family to try and hold on to a home you can no longer afford. If you are in a default or foreclosure situation contact your lender and your local VA Regional Loan Service Center for help and to find out what you can do.

See a related article: VA Mortgages and Social Security

VA LOAN SPECIALISTS

We are the online VA loan specialists. If you need to modify your VA loan, tt is our goal to ensure that your VA home loan process goes as smoothly as possible. Let us help you get the process started today online, or call us at 800-405-6682.

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If you need advice concerning Veteran Home Loans, feel free to contact a VA mortgage specialist online or call 800-405-6682. Specialists can help determine whether modifying your Veteran Home Loan is the best financial decision for you.

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