Active military members often get deployed at a moment’s notice, and no one knows whether they will come back or not. In such instances, it can get complicated to figure out what to do with their Veteran home loan. So, what happens to the loan if the borrower dies?
As a Veteran or military member, you may have had this thought many times. Now, it is time for you to get the answer.
What Happens to a Veteran Home Loan after a Borrower Passes Away?
The US Department of Veteran Affairs offers VA home loans to eligible Veterans, military members, and their spouses. If a Veteran dies on the job, the home loan is inherited by the next-of-kin. What happens next depends on the situation.
Loan Possession Goes to the Beneficiary
It is a common assumption that the military pays off the home loan of a deceased Veteran. However, this is incorrect. The possession of the loan shifts to their beneficiary, which is sometimes clearly mentioned in the Veteran’s will. If no one is mentioned in the will, it automatically passes to their spouse or estate.
The beneficiary has to continue to make payments on the VA home loan. Otherwise, they risk repossession of the property. This means that the VA can foreclose on the property even if the deceased gave it to someone in their will.
Loan Payment Continues in the Veteran’s Name
The beneficiary can keep making payments in the name of the deceased Veteran. This means that you don’t have to have the loan officially transferred or assumed.
It May Be Possible to Refinance the Loan
The death of a family member can be difficult to deal with emotionally as well as financially. In some cases, it can become difficult for the family to pay back a Veteran’s home loan. If this is the case, refinancing can be a good option. The VA allows beneficiaries to refinance loans. Refinancing may possibly help lower the monthly payment and interest rate, easing the financial burden for the surviving spouse and/or family members.
You Can Sell the Property
If the beneficiary has no resources to pay the loan, they can try to sell the property to pay it off.
Get More Information on Veteran Home Loans
Losing a loved one can be hard, but there are many options that can help you cope with the financial aspect of your situation. For more information on VA home loans, call Mortgage Solutions Financial today.
