How to Modify the Value of a VA House Loan

By DB Jenkins

The Department of Veterans Affairs is the federal administration responsible for the welfare, assistance and care of veterans. In addition to pension disbursements, health care and disability assistance, the VA department also makes direct loans to veterans. If you have a VA loan that has become unmanageable, you may be able to modify that loan. However, to do so, you must first meet all the conditions required for modification, and your income must also preclude you from paying the mortgage as agreed.

Calculate your debt-to-income ratio (DIR) and disposable income (DI). These two numbers are essential to modification. If your income disqualifies you from a modification, there is no need wondering whether you meet the other qualifications.

To calculate DIR, divide the sum of all monthly expenses by your total gross income. To calculate DI, subtract the sum of your monthly expenses from your net monthly income. The VA will not consider a modification if you have a DIR below 50 percent or more than $500 in disposable income each month.

Check to see if you meet the other requirements if your income qualifies you for a modification. To qualify, your loan must: be currently in default; be in default because of circumstances out of your control; and not have been modified in a three-year period, or more than three times in the life of the mortgage. In addition, you must have made at least 12 mortgage payments on the VA loan.

Contact your local VA representative. See the Resources section for a search tool for VA representatives. Ask to speak with a housing and lending representative. Schedule a meeting to discuss and apply for a mortgage modification. Make copies of all the documents listed in the "Things You'll Need" section before the meeting.

Complete the mortgage modification application with a VA counselor. They should calculate your income, too, to determine your eligibility. Give the representative all of your paperwork related to your financial hardship.

Wait for a decision from the VA. It normally takes no more that two weeks for the VA to reach a decision on your mortgage modification. If denied, you can appeal the decision with your local VA officer.

http://www.lenderva.com