As a veteran, you are entitled to special home lending options that make it easier for you to purchase a home. The VA home loan process pairs you with a lender that can help you secure funding to purchase a home. But like a regular home loan, if you don’t keep up with your payments, you can enter the process of foreclosure. But foreclosing on a VA home loan has unique conditions and consequences. If you’re facing foreclosure on a VA loan in Colorado Springs, let the home sales specialists at Sell Your House For Cash CO walk you through the process and help you avoid foreclosure.
How Often Do Individuals Foreclose On A VA Loan?
Thanks to the unique circumstances of a VA loan, foreclosing on these loans is fairly rare. However, it does occur more frequently than anyone would like. The VA offers a variety of protections for borrowers to keep them from losing their property. While regular mortgage borrowers have to negotiate with their lender on their own, veterans can work with the VA to create a repayment schedule with the lender that keeps the veteran in their home and keeps them out of foreclosure. It’s not uncommon for the lender to be more willing to work with a borrower as long as that borrower has the backing of the VA.
Consequences Of Foreclosing On A VA Loan
Foreclosing on any loan can hurt your financial standing and may keep you from moving into another home quickly. However, foreclosing on a VA loan comes with its own set of unique consequences.
One of the immediate consequences of foreclosure is that your credit score will be impacted. It’s not uncommon for borrowers to see their credit score drop by anywhere from 150-250 points. This can prevent you from applying for loans in the future, and can also impact your ability to get financing options on other major purchases like appliances and automobiles.
By foreclosing on a loan, the lender has essentially forgiven your debt. That means that the remaining balance of that debt is suddenly counted as taxable income. You’ll have to pay taxes on however much money was left in your loan before the foreclosure.
VA Loan Specific Consequences
The numerous protections on a VA loan are meant to keep you from foreclosing, but if you do, you’ll face a difficult set of circumstances when you try and get another VA home loan in the future. Until you entirely pay off your VA loan, your future VA loan applications will be limited by the amount you still owe. Essentially this means that you will not be able to apply for and receive another VA home loan until you pay off what you owe on the previous loan. While you can use second-tier loan entitlement, some lenders may require you to wait two years to do so.
Avoid Foreclosure By Selling To Us
You can avoid foreclosing on a VA loan in Colorado Springs by selling your home for cash. Sell Your House For Cash CO makes all-cash offers on all kinds of homes in any condition. Use the cash to pay off your loan and reclaim your financial independence. Contact us today to start the home selling process and get an all-cash offer!