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So, I am still fretting about what to do with my house. I own a house with my soon to be ex, that is currently about $5000 upside down, thankfully not more. The house is in Phoenix, in a well established neighborhood, but surrounded by new builds that went up in the late 90's early 2000's, got snapped up by investors, flipped several times, and then bought by 1st time buyers who promptly gave into foreclosure after realizing they had bought at hugely inflated values. I DIDN'T buy at an inflated value, but when there houses are selling for $40 & $50K in short sales, its hard to get any comps to price up my house. Anyways . . .
I'm kind of screwed for refinancing to get hubby's name off the mortgage, because of the upside down thing. I don't have $20K sitting around to bring to a refinance, to bring my LTV to 80% (I don't live in the house, so it's considered an investment, and would have to go conventional)
I did read a tiny sliver of hope, though, where someone discussed VA loans, where the loan is assumed by the non military owner, particulary when the terms of the divorce give the non-military owner spouse the property. That is exactly what I'm looking at.
So . . . anyone out there know anything about assuming a VA loan, releasing my ex from liability, and if it's possible to assume the loan, if the value of the house is currently less than what is on the loan?
Do I contact the VA, or the lender (Countrywide) What do I need to ask about, what kind of time frame am I looking at, what should I expect to have to bring to the table, and is it even possible?
I can say that I have a credit score above 800, and my salary alone is plenty to qualify me for a mortgage of this amount or higher. I have always made the mortgage payments on time, and I have always paid more than the actual amount due. I am coming out of the divorce with no savings except for my 401K and deferred comp plans, so I just don't have cash to put out on the table.
So, I am still fretting about what to do with my house. I own a house with my soon to be ex, that is currently about $5000 upside down, thankfully not more. The house is in Phoenix, in a well established neighborhood, but surrounded by new builds that went up in the late 90's early 2000's, got snapped up by investors, flipped several times, and then bought by 1st time buyers who promptly gave into foreclosure after realizing they had bought at hugely inflated values. I DIDN'T buy at an inflated value, but when there houses are selling for $40 & $50K in short sales, its hard to get any comps to price up my house. Anyways . . .
I'm kind of screwed for refinancing to get hubby's name off the mortgage, because of the upside down thing. I don't have $20K sitting around to bring to a refinance, to bring my LTV to 80% (I don't live in the house, so it's considered an investment, and would have to go conventional)
I did read a tiny sliver of hope, though, where someone discussed VA loans, where the loan is assumed by the non military owner, particulary when the terms of the divorce give the non-military owner spouse the property. That is exactly what I'm looking at.
So . . . anyone out there know anything about assuming a VA loan, releasing my ex from liability, and if it's possible to assume the loan, if the value of the house is currently less than what is on the loan?
Do I contact the VA, or the lender (Countrywide) What do I need to ask about, what kind of time frame am I looking at, what should I expect to have to bring to the table, and is it even possible?
I can say that I have a credit score above 800, and my salary alone is plenty to qualify me for a mortgage of this amount or higher. I have always made the mortgage payments on time, and I have always paid more than the actual amount due. I am coming out of the divorce with no savings except for my 401K and deferred comp plans, so I just don't have cash to put out on the table.
Thanks for any and all suggestions!
I was under the impression VA loans are not assumable.
If he is a soon to be ex and you are keeping the house, why isn't HE paying you half it's value in the divorce settlement? You could then use the proceeds from his half to refinance and get him off the loan and title. Talk to your divorce attorney for help with this.
Location: central, between Pepe's Tacos and Roberto's
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Quote:
Originally Posted by lovesMountains
I was under the impression VA loans are not assumable.
If he is a soon to be ex and you are keeping the house, why isn't HE paying you half it's value in the divorce settlement? You could then use the proceeds from his half to refinance and get him off the loan and title. Talk to your divorce attorney for help with this.
VA loans are absolutely assumable, although I am pretty sure that it must be a credit qualified veteran that assumes it. Also, in a divorce it's half of the assets, not half of the value. Considering the property is upside down there is no equity to be split.
I do know that you can refinance up to 100% loan to value with a VA loan. OP, which one of you is the qualifying veteran?
EDIT: Re-read the original post and am a bit confused. Who is the qualifying veteran, OP or spouse? Who got the house in the divorce? If you are not currently living there why do you want to get the spouse off of the loan? Do you have someone lined up to assume the loan? I also will have to look into non-vet exceptions with regards to assumability in the case of a divorce.
Last edited by Daddys///M3; 01-26-2009 at 11:42 PM..
VA loans are absolutely assumable, although I am pretty sure that it must be a credit qualified veteran that assumes it. Also, in a divorce it's half of the assets, not half of the value. Considering the property is upside down there is no equity to be split.
I do know that you can refinance up to 100% loan to value with a VA loan. OP, which one of you is the qualifying veteran?
EDIT: Re-read the original post and am a bit confused. Who is the qualifying veteran, OP or spouse? Who got the house in the divorce? If you are not currently living there why do you want to get the spouse off of the loan? Do you have someone lined up to assume the loan? I also will have to look into non-vet exceptions with regards to assumability in the case of a divorce.
I am getting the house in the divorce. He is the military person. I want my spouse off the loan, because the ONLY reason he agreed to give me the house is because its upside down. The minute there is any kind of rebound in the market, and his name is still on the property, he will be back in court in a heartbeat. I can only take so much more of court. He has already said he will not take his name off the title, unless it comes off the mortgage also, and if I can't get his name off the mortgage, he would rather walk away and ruin his credit, (and mine) than allow me to continue to manage it as a rental with his name on it.
VA loans are absolutely assumable, although I am pretty sure that it must be a credit qualified veteran that assumes it. Also, in a divorce it's half of the assets, not half of the value. Considering the property is upside down there is no equity to be split.
I do know that you can refinance up to 100% loan to value with a VA loan. OP, which one of you is the qualifying veteran?
EDIT: Re-read the original post and am a bit confused. Who is the qualifying veteran, OP or spouse? Who got the house in the divorce? If you are not currently living there why do you want to get the spouse off of the loan? Do you have someone lined up to assume the loan? I also will have to look into non-vet exceptions with regards to assumability in the case of a divorce.
THAT's what it is, they are only assumable to other vets, now I remember.
I don't care if there is no equity to split - a divorce judge should order her ex to buy out her half of the home at whatever current market value is. He may have to take a loan to do that himself, but oh well. OP, you need to be talking to your lawyer about this. You are not getting him off the current mortage without paying it off and applying for a new one. Even if you convinced him to get off the title in a quit claim (which you said he would never do) he still would not be off the mortgage. You HAVE to get a new loan and since you are not the Vet you would need his help in finding a Vet willing to assume his loan.
Your best bet truly is to have the judge order him to pay you half of market value for the home. You take THAT money and refinance.
Last edited by lovesMountains; 01-27-2009 at 11:03 AM..
THAT's what it is, they are only assumable to other vets, now I remember.
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VA loans are absolutely assumable by non-military. I know that, I used to work in real estate. However, I wasn't actually doing mortgages so I don't know the specifics. Like - if I have to prequalify, bring the value into the limits of the original loan financing from 10 years ago. Or, who I go to to get it done, and all the other questions in my original post. That's why I was hoping to come across someone who actually works in the mortgage industry, who might have some specific answers or direction for me. If I call a mortgage company, I spend 40 minutes giving out not relative information before I get the standard - "there's no program to help you" I don't WANT HELP, I want to do it on my own, without his name, and without screwing myself 2 years from now.
VA loans are absolutely assumable by non-military. I know that, I used to work in real estate. However, I wasn't actually doing mortgages so I don't know the specifics. Like - if I have to prequalify, bring the value into the limits of the original loan financing from 10 years ago. Or, who I go to to get it done, and all the other questions in my original post. That's why I was hoping to come across someone who actually works in the mortgage industry, who might have some specific answers or direction for me. If I call a mortgage company, I spend 40 minutes giving out not relative information before I get the standard - "there's no program to help you" I don't WANT HELP, I want to do it on my own, without his name, and without screwing myself 2 years from now.
Is there some reason you don't want a judge to order your ex to buy out your half of the home??
Location: central, between Pepe's Tacos and Roberto's
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Quote:
Originally Posted by luv_it_here
VA loans are absolutely assumable by non-military. I know that, I used to work in real estate. However, I wasn't actually doing mortgages so I don't know the specifics. Like - if I have to prequalify, bring the value into the limits of the original loan financing from 10 years ago. Or, who I go to to get it done, and all the other questions in my original post. That's why I was hoping to come across someone who actually works in the mortgage industry, who might have some specific answers or direction for me. If I call a mortgage company, I spend 40 minutes giving out not relative information before I get the standard - "there's no program to help you" I don't WANT HELP, I want to do it on my own, without his name, and without screwing myself 2 years from now.
I should have an answer for you by the end of the day (I am in the mortgage business). Your scenario is not a common one and I will need to look in the VA pamphlets for the correct answer.
Is there some reason you don't want a judge to order your ex to buy out your half of the home??
Lets say a judge orders him to buy out 1/2 the house. 1/2 the house at the current value is 45K$. The current mortage is 95K$. 1/2 the mortgage is $47.5K$. He pays me $2.5K. I still need 18K$ to bring the LTV to 80% to do a refinance as a conventional loan for what is technically currently an investment property, because I don't live there. Then, I still have to pay closing costs to refinance a loan, and lengthen the terms of the loan by 8 years, only reducing my PITI by maybe $100 a month.
I would much rather assume the mortgage that is already in place, hopefully with fewer fees, no new title search fees, points, waiting, etc. Even if a judge makes him split the total cost to refinance to conventional (roughly 20k$) well then at that point, the mortgage is only 75K$, the house is worth 90K$, and now I owe him back the difference of 7.5$ (1/2 the remaining equity of the asset.) Either way, I'm out of pocket more than he is, if I have to start a new mortgage during the downturn.
Its just the way the PHX market has worked out. We bought the house in 2000 for $107K, at its high point in 2006, it appraised at $270K, and it is down roughly 2/3 of that in current market, because of short sales, and an overabundance of new builds that couldn't sell out when the bubble burst.
This might help:Loan Assumption Requirements and Liability: VA loans made on or after March 1, 1988, are not assumable without the prior approval of VA or its authorized agent (usually the lender collecting the monthly payments). To approve the assumption, the lender must ensure that the assumer is a satisfactory credit risk and will assume all of the veteran’s liabilities on the loan. If approved, the assumer will have to pay a funding fee that the lender sends to VA, and the veteran will be released from liability to the federal government. A release of liability does not mean that a veteran’s guaranty entitlement is restored. That occurs only if the assumer is an eligible veteran who agrees to substitute his or her entitlement for that of the seller. If a veteran allows assumption of a loan without prior approval, then the lender may demand immediate and full payment of the loan, and the veteran may be liable if the loan is foreclosed and VA has to pay a claim under the loan guaranty.Loans made prior to March 1, 1988, are generally freely assumable, but veterans should still request VA’s approval in order to be released of liability. Veterans whose loans were closed after Dec. 31, 1989, usually have no liability to the government following a foreclosure, except in cases involving fraud, misrepresentation, or bad faith, such as allowing an unapproved assumption. However, for the entitlement to be restored, any loss suffered by VA must be paid in full.
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