Homes financed through VA loans may face foreclosure when borrowers fall behind on payments. As noted by the U.S. Department of Veterans Affairs, however, options exist to avoid losing your property. You may, for example, contact your mortgage servicer and ask if you could alter your payment arrangement.
If you experience financial hardship, a lender may move your payment due date to meet a new budget. Your servicer may also offer a repayment plan that breaks up past due balances and adds them to future payments.
Qualifying for a mortgage forbearance
Some VA loan servicers offer forbearance, which could give borrowers time to catch up. As noted by Money.com, forbearance pauses or suspends loan payments. In some cases, forbearance may reduce your monthly payments for a short period.
When forbearance ends, however, your servicer may require a balloon payment. A lump sum typically covers the amount placed on pause or makes up for the deficit from reduced payments. If you cannot pay the lump sum, you may need to refinance your mortgage and lower your monthly payments.
Selling a home to avoid foreclosure
Before selling your home to avoid a foreclosure you may hire a professional appraiser to assess its current market value. After subtracting the amount of your mortgage balance and selling fees from the market value, you could determine whether selling your home could pay off the loan.
If your property’s market value does not cover the mortgage, you may contact your servicer to ask if it would accept a short sale. Some services may not agree to a short sale because it allows borrowers to sell properties for less than the balance owed on their mortgages.
By contacting a loan servicer, you may come to a workable payment arrangement. With a steady income, you could also consider filing for bankruptcy to protect your home.