The VA is very giving when it comes to the home loan benefit for the veterans of our country. As a spouse of a veteran, you are able to take advantage of those benefits too. If you divorce, though, you are in a completely different category. The circumstances of the divorce will determine how you must proceed.
Who’s Keeping the Home?
The first thing that must be worked out is deciding who’s keeping the home. If the veteran keeps it, there isn’t a lot you have to worry about as far as the VA loan. The VA allows veterans to keep the loan on their own, assuming they continue to make the payments on time.
If you decide the non-veteran spouse will keep the loan, there are a few things to consider. If you want to get your name off the loan altogether and you are the veteran, your ex-spouse loses all VA benefits. He/she cannot apply for another VA loan. Instead, he/she will have to refinance into another mortgage program.
If you are willing to keep your name on the loan, your ex-spouse can keep the VA loan. Keep in mind, though, your name stays on the loan. This means you are liable if your ex-spouse doesn’t make the payments. You also don’t get to reuse your entitlement that is tied up with this home. Because you can’t have two VA loans at once, in most cases, you will have to use another loan program if you need a loan to buy another home.
Selling the Home
If you and your ex-spouse decide to split up and sell the home, the veteran’s entitlement can be reinstated upon request. This is assuming, of course, that you pay the mortgage off in full and sell the home. Once that’s done, you (the veteran) can request reinstatement of your entitlement and buy another home with your VA benefit.
Your ex-spouse will not have any VA benefits, though. He/she will have to use another loan program to buy a home for themselves. The only time the VA allows spouses to continue with the VA benefit is in the event that a veteran dies will in the line of duty and while married to you.
Divorce can be messy and it can get even worse if you have a VA loan. If you want your name off that loan, you are going to have to work it out in court with your ex-spouse. It’s just another factor that will affect the divorce, as the VA won’t allow a non-veteran to remain on the loan alone.