VA Loan Borrowers: Consider Mortgage Refinancing with Other Relief Measures
Richard BarringtonLoanBiz Columnist
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.
Source:
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.
