VA Loan Articles
What Happens to the VA Loan if the Borrower Dies?When it comes to VA home loans, there are a great deal of myths and misunderstood rules --all things that borrowers need to understand properly in order to make informed decisions. Some myths are about the nature of VA loans--there's still a misconception that government agencies such as the FHA or Department of Veterans Affairs are in the business of lending money rather than insuring loans taken out with a bank or financial institution.
Another area of misunderstanding involves what happens to the VA mortgage if the borrower dies. It's easy to see why people might mistakenly believe the VA loan guaranty is designed to pay off the mortgage should the borrower die before the loan has been paid in full, but the reality is quite different.
According to the Department of Veterans Affairs official site at www.VA.gov, if a borrower dies before his or her VA mortgage is paid in full, "The surviving spouse or other co-borrower must continue to make the payments. If there is no co-borrower, the loan becomes the obligation of the veteran's estate. Mortgage life insurance is available but must be purchased from private insurance sources."
VA insured home loans are no different than any other financial obligation a veteran has--they are treated exactly the same as a conventional mortgage in this regard. If a VA borrower dies, all payments including credit card debt, student loans, and yes, a VA mortgage, would become the financial responsibility of the surviving spouse or the veteran's estate.
The mortgage life insurance mentioned earlier is definitely an option VA borrowers have and can explore, but such insurance is a personal choice and not a requirement of the VA as a condition of getting a VA mortgage. These types of decisions are left up to the borrower and like a VA home loan itself, the borrower should invest time in comparison shopping and research before committing to such insurance.