It is unfortunate, but the divorce rate among those serving in the armed forces is near twice the national average. And if you’re a female servicemember, your chances of getting a divorce are even higher.
There are numerous reasons why military members are more prone to divorce than civilian couples. For instance, moving and disturbing family routines more than the average couple can lead to problems. Add to that the stress that’s an inevitable part of a military career. And then there’s the unfortunate fact that many military couples spend inordinate time apart, leaving one spouse to manage the responsibilities at home – often while juggling low wages.
When navigating a military divorce, there are special considerations involved that go beyond the basics. Along with working through matters dealing with military benefits and child custody issues, if you bought a home as a couple with a VA Home Loan, you now have new and complex sets of problems. Remember, one of the ways that VA Loans differ from traditional loans is that the Veteran Administration has definite occupancy requirements on who can and can’t reside in a home bought with a VA Loan.
However, if the civilian spouse is a cosigner, they can remain in the home without the servicemember living there. But note that the Veteran can’t restore their entitlement unless their ex-spouse refinances or pays off the VA Loan in full.
The bottom line is that only an eligible Veteran or active-duty servicemember can use a VA Loan to purchase a house. Their spouse receives the benefit only as long as they’re married or widowed (or the spouse is a POW or missing in action), in which case, the surviving spouse becomes a qualified borrower. But once the divorce is final, the ex loses all rights to a VA Home Loan.
Here are some key pieces of information you’ll need should you find yourself on one side or the other of a military divorce as joint homeowners of a house bought using a VA Home Loan.
Can a nonmilitary spouse assume the VA mortgage in a divorce?
It depends. First, each state has its community property laws that dictate who has the obligation of debts incurred in a legal marriage and how VA Home Loans may proceed during a divorce. For instance, in community property states – think California, Texas, and Arizona – property acquired during a marriage belongs equally to each spouse. But in states with equitable distribution, elective share, or separate property laws – Georgia, New York, and Oregon, for instance, a judge divides a married couple’s assets, giving each a percentage of a property’s value. Looking up state law before applying for a VA Home Loan is not on anyone’s mind when the excitement (and stress) of purchasing a home takes over, but it’s wise.
And if the spouse is not listed on the property’s title and original mortgage contract, they can’t assume the VA Loan. In other words, they need to be legally obligated on the loan contract or title to assume the loan. So, if the divorced civilian spouse were listed on the loan and title, they could keep the property as long as they continued making the mortgage payments.
Can the nonmilitary divorced spouse refinance the assumed loan with a VA IRRRL?
A VA Interest Rate Reduction Refinance Loan (IRRRL) provides a method to get lower monthly mortgage payments. However, the only way for a divorced homeowner to get an IRRRL is if the military ex-spouse commits their entitlement on the new loan because any person without VA entitlement isn’t eligible for any VA Loan or VA refinance. In this case, it would pay to remain on excellent terms with your ex.
Can I buy out my ex-spouse with a VA IRRRL?
Yes, you can buy out your ex-spouse’s share of the house as long as you’re an eligible Veteran or active-duty servicemember and if you and your then spouse applied for the VA Home Loan together after you were legally married.
However, note that state law and lender standards may apply, so to ensure you have all the information needed for your specific circumstances, speak to your VA Loan specialist. And if your ex was on the original mortgage as a co-borrower, then your lender could ask you to provide proof showing you can continue to make the mortgage payments yourself.
Is it easier to just sell the house when you divorce?
In some cases, yes. Once you sell it, the VA Loan gets paid off, and any remaining profit is divided between the spouses. Afterward, as a Veteran or active-duty servicemember, you can, once again, use a VA Loan to purchase another house – as long as you pay off the original VA Home Loan.
But sometimes selling isn’t the best option. Uprooting children from their home and school can have negative effects.
Final thoughts
Keep in mind that no two divorce scenarios are the same, and they are even more complex when one person is a member of the armed forces, and another is a civilian. So, when you’re dealing with an emotional situation and then add on the intricacies of Veterans’ benefits and VA Loans, you should make sure that you find an attorney familiar with military divorces. Not only will the right lawyer negotiate divorce terms, but they can ensure that all phases of the process are accurate so you can maintain your eligibility for future VA Home Loans.
