Military Streamline Loans
Military Streamline Loans are a great way for veterans who are having a difficult time paying their mortgage each month to lower it. The way Military Streamline Loans work is that the veteran or VA Loan holder takes out a Military Streamline Loan that effectively pays for their existing VA Loan. The new loan will offer lower monthly interest rates and new loan terms.
Why Streamline?
With a Military Streamline Loan, you can refinance your home and enjoy lower mortgage payments easily and without hassle. Since the VA already has your existing paperwork on file from your previous VA Loan, they can refer to that when qualifying you for a Military Streamline Loan. In addition, you can rollover the funding fees into the Military Streamline Loan, so you don’t have to pay any money out of pocket.
Military Streamline Loans are regarded as one of the best programs out there for VA Loan holders, and a definite benefit when interest rates fall.
Marriage, Divorce and VA Streamline Loans
Sometimes, veterans take out a VA Home Loan to purchase their home, and then when they decide to avail themselves of the Military Streamline Loan option, their marital status has changed.
Here are some factors when applying for a Military Streamline Loan if you got married, divorced or remarried in between your original VA Loan application and present time:
- All parties on the original VA Loan must be named on the Military Streamline Loan
- You can add a new spouse to the Streamline Loan application if you so wish, and will have to furnish their financial information so they can be approved by the VA
- Military Streamline Loan recipients cannot take cash out from the loan; its sole purpose is to help the veteran financially in terms of their mortgage. If you have a situation that requires cash, a VA Cash-Out Loan is probably a more desirable option for you.
Ex-Spouses and Military Streamline Loans
Even if you have since divorced, if your spouse is on the original loan, they must be named on the new VA Military Streamline Loan. The reasoning behind this is that the streamlined loans do not require credit reports. The previous paperwork is used to qualify you for the new Military Streamline Loan, and all the parties on the original loan paperwork were approved by the VA.
Therefore, if you decide you want to remove your ex-wife or ex-husband from your VA Loan, you essentially have to submit all the paperwork over again, just like the first time you applied for the loan. You will need to have a new credit report done, a debt-to-income ratio, as well as a number of additional procedures.
Divorced VA Loan Recipients
Many divorced veterans choose to come to an agreement with their ex with respect to the loan. Divorced VA Loan Holders will often ask their spouse to get a conventional refinancing loan instead of one through the VA to avoid the paperwork and hassle. When they do that, however, their ex loses out on all the benefits a VA Loan confers.
Non-military ex-wives and ex-husbands also are not permitted to get Military Streamline Loans themselves once they are divorced. Since they no longer have a connection to the veteran, the VA doesn’t think it appropriate they should be able to avail themselves of benefits and perks specifically designed for the men and women who risked their lives serving their country.