VA Loan Borrowers: Consider Mortgage Refinancing with Other Relief Measures

Richard Barrington
LoanBiz Columnist

Article Rating , 4 out of 5 based on 1 votes

In the wake of recent tornados in the south and wild fires in California, the US Department of Veterans Affairs recently issued a bulletin containing useful advice for VA home loan borrowers who have been affected by these natural disasters. Along with these steps, borrowers should also consider refinancing their VA loans, because this might provide additional relief.

Natural Disasters and VA Loans

Natural disasters place special stresses on borrowers with VA loans and other types of mortgages. These borrowers are expected to maintain their normal mortgage payment schedules even while they face additional costs such as temporary housing, repairs, and replacement of lost possessions. At the same time, these same disasters may have caused a disruption in normal sources of income. Often, relief in the form of insurance and government assistance is available, but can take some time to come through.

The tornados that ripped across a wide swath of the South are only the most recent examples of this type of disaster. California has battled wild fires for several months, and some homeowners still haven't recovered from Hurricanes Katrina and Rita, which struck a few years ago. It is in recognition of these disasters that the Department of Veterans Affairs has issued an advisory for VA home loan borrowers who may have been affected.

Disaster Relief

Here is a summary of things the Department of Veteran Affairs recommends VA loan borrowers do if their homes are struck by a disaster:

  • Contact the mortgage company. There are two things to remember about this. First, VA home loans are insured by the VA, but they are issued by independent lenders. Therefore when any issues arise, borrowers should contact their mortgage lender rather than the VA. The reason this contact is important is because of the second issue: no matter how devastating the disaster, mortgage payments will remain due unless the borrower has taken some action.
  • Contact your insurance company. Contacting the mortgage company will enable borrowers to make provisions for their VA loans, but it is the insurance company that will be the first source of any compensation for damage. The Department of Veterans Affairs reminds homeowners in this situation to hold out for a fair insurance settlement, and not just accept the first figure that is offered.
  • Contact FEMA. This will inform the homeowner of any special sources of assistance that might be available. While these can come from a variety of sources, FEMA generally acts as a clearinghouse for eligibility information.
  • Contact local veterans' organizations to see if any additional help is offered.
  • Remember to notify the post office of any temporary address changes. Since mortgage payments will continue to be due unless special arrangements have been made, it is important that VA loan borrowers make sure their veterans benefits and other sources of income are not disrupted while their homes are out of commission.

Don't Forget About Refinancing

There is one piece of advice in addition to the things mentioned by the Department of Veterans Affairs: don't forget about refinancing. Refinancing can be one means of relieving some of the financial stresses brought on by a natural disaster.

This is especially true at the moment, since interest rates on VA home loans have declined sharply over the past several months. Often, when a disaster strikes, it is natural for a homeowner to try to suspend loan payments for a period of time, but putting the loan on "hold" might mean missing the current interest rate opportunity. The possibility of refinancing should be part of the conversation with the mortgage company about how to deal with any adverse circumstances.

US Department of Veterans Affairs

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.

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