Navigating Divorce and VA Loans in Minnesota Real Estate
Divorce brings a host of challenges, particularly when it involves real estate and VA loans. For veterans in Minnesota, grasping the intricacies of managing a VA loan during a divorce is essential. Here’s a comprehensive guide to help you navigate this complex process.
Understanding VA Loans in Divorce
VA loans offer veterans the benefit of homeownership with favorable terms, such as no down payment and competitive interest rates. However, when a marriage ends, figuring out what happens to the home and the loan can be complicated.
Assumability of VA Loans
One key feature of VA loans is their assumability. This means that another qualified individual can take over the loan, keeping the same terms. In the context of a divorce, if both spouses are active military members or veterans, this feature can be particularly beneficial. Here’s how it works:
Assumption Process: The spouse who wishes to retain the home and the loan must go through the assumption process. This involves applying to the lender, meeting their criteria, and paying any applicable fees.
Remaining Entitlement: If the departing spouse’s entitlement is tied to the existing loan, they will be unable to use it for purchasing another home until the loan is either paid off or assumed by another eligible veteran.
Steps to Take
1. Consult with Professionals
Consider hiring an experienced Realtor®, such as a Certified Divorce Real Estate Expert (CDRE®), and a divorce attorney. A CDRE® is specially trained in real estate matters within divorce proceedings.
2. Communicate with Your Mortgage Lender
Reach out to your mortgage lender regarding the divorce and explore the option of loan assumption. They will provide guidance on the required steps and documentation needed for this process.
3. Assess Financial Implications
Evaluate the financial impact of one spouse assuming the loan. Confirm that the spouse retaining the home can comfortably manage mortgage payments and associated expenses on one income.
4. Update Legal Documents
Following the loan assumption, ensure all pertinent legal documents, including the deed and any joint accounts linked to the property, are promptly updated.
Benefits of Loan Assumption
Continuity: The spouse assuming the loan can maintain the same interest rate and loan terms, avoiding the need for refinancing.
Simplicity: Assumption can be less complex and costly compared to selling the home or refinancing.
Potential Challenges
Eligibility: Not all lenders may agree to a loan assumption. It’s essential to check with your lender early in the process.
Entitlement Issues: The veteran whose entitlement remains tied up in the loan won’t have it available for future use until the loan is paid off or assumed by another veteran.
Navigating divorce and VA loans in Minnesota demands meticulous planning and expert guidance. By comprehending the intricacies of loan assumption and collaborating with experienced professionals, active military members and veterans can forge a path that reduces financial stress and facilitates a more seamless transition during this challenging period.
For anyone with real estate inquiries or seeking assistance, feel free to reach out to Shannon Lindstrom, Realtor® at RE/MAX Results. Shannon is a MN Certified Divorce Real Estate Expert (CDRE®), as well as a Certified Military Residential Specialist (MILRES), Military Relocation Professional (MRP), and a Certified Military Veterans Real Estate Agent (VCA), serving the Twin Cities/MN area. Contact Shannon directly at 612-616-9714 or visit www.ShannonLindstromRealtor.com for more information.
Shannon Lindstrom, Realtor®, CDRE®, CREDS, CRS, GREEN, MILRES, MRP, VCA
RE/MAX Results
7373 Kirkwood Court No, Ste. 300
Maple Grove, MN 55369
Direct: 612-616-9714
Lindstrom_S@msn.com
Shannon@ShannonLindstromRealtor.com
www.ShannonLindstromRealtor.com
www.ShannonLindstrom.info
www.TwinCitiesMilitaryVeteransRealtor.com
www.MNDivorceRealEstateExpert.com
