VA Streamline Loans for Surviving Spouses
Recently we’ve had some questions about who might be eligible for a VA home loan benefit besides the veteran–we’ve been asked if siblings or children of veterans who have passed away can qualify for VA loan benefits. The VA loan program only makes provisions for surviving spouses of military members to apply for VA loan benefits without the veteran; many want to know if those provisions include VA streamline loans.
Under the right circumstances, a surviving spouse of a veteran can apply for a VA Streamline Refinancing Loan (also known as a VA Interest Rate Reduction Refinancing Loan or IRRRL). What are the VA loan rules for these applications?
The surviving spouse should know a few basics about VA Streamline Refinancing. The VA Lender’s Handbook instructs the lender, “Generally, the party(ies) obligated on the original loan must be the same on the new loan (and the veteran must still own the property). The lender should contact VA regarding a proposed IRRRL involving a change in obligors unless the acceptability of the IRRRL is clear.”
A surviving spouse may or may not be on the original mortgage. The VA has rules that govern each circumstance. For example, in situations where the veteran and spouse were obligated on the original loan, a VA IRRRL is allowed. A VA IRRRL is not permitted where the spouse was divorced from the veteran–the VA loan benefit is extended to the spouse by virtue of marriage, but after divorce the spouse does not have access to the VA home loan benefit.
The same is true, according to VA Pamphlet 26-7, if the borrower applied for a VA mortgage alone as a single person, got married, and later died without the spouse being added to the VA mortgage loan.
These rules may seem a bit confusing, but the bottom line is that if the veteran was married at the time of the VA home loan, that spouse is eligible for a VA IRRRL regardless of whether he or she was obligated on the original mortgage, provided the veteran and spouse did not get a legal divorce.
These rules are found on the VA official site in the VA Lender’s Handbook, Chapter Six. For more information speak to a loan officer or call the VA directly at 1-800 827-1000.
Do you have questions about VA home loans? Ask us in the comments section.