What Happens When You Default on a VA Home Loan in Colorado Springs?
If you live in Colorado Springs are looking into getting a VA home loan, you may have questions about what happens if you cannot make the payments. Unfortunately, there are no certainties in life. Exceptional circumstances, often out of our control, may force us to end up defaulting on a VA home loan. Here’s what you can expect to happen if you do.
Defaulting on Your VA Home Loan
When you fail to repay your VA loan according to the agreement made with the bank when the loan was issued, you will go into default. Just as with a conventional mortgage, there are significant consequences associated with defaulting on a veterans loan. Your lender may even force you out of the home through foreclosure in addition to disruption in your eligibility for another VA home loan.
Partial Loss of Eligibility
Unfortunately, you will lose your VA loan eligibility to an extent. This means future mortgage benefits may be out of your reach, at least to a certain extent. This is to ensure borrowers do not arbitrarily default, putting the program in jeopardy.
A Major Hit to Your Credit Score
Be prepared to experience a substantial hit to your credit score. You can expect your credit score to decline by 85 to 165 points. This is typical after any kind of foreclosure, backed by the VA or not. You are personally responsible for paying your Colorado Springs lender for your VA home loan. The VA just makes sure that you can secure the loan.
How to Restore VA Eligibility
Making good on whatever the government may have lost because of your decision to default can help improve your chances of restoring your eligibility in the future. However, this will only occur after the minimum hold of two years after the foreclosure has passed. After these two years, your VA guaranteed eligibility for a mortgage may be restored.
Even if the loss that the VA incurred on your default was not entirely recovered, you may receive a partial restoration. Either way, you will need to apply to have your eligibility restored.
Discuss Your Options
If you are worried about defaulting on your Colorado Springs VA home loan, give the loan officers at Mortgage Solutions Financial a call or stop in to discuss your financial situation. They can discuss what your available financing options are so that you can make the best decision for you and your family.