VA Loans and Short Sales

Veteran Administration loans have assisted countless service men and women in purchasing homes. One of the primary benefits of using a VA (U.S. Department of Veterans Affairs) loan is that the service member is not required to submit a down payment. There are many other benefits as well, such as superior financing percentages and mortgage insurance options that enable participants to be eligible for larger loans. Even if an individual has taken advantage of a VA loan, some still fall victim to financial troubles and are sometimes forced to give up their homes. Even if an individual finds him or herself in this situation and decides to conducts a short sale, they may be eligible to reapply for a VA loan after a brief waiting period. In order to restore eligibility and reapply for a VA loan, there are a few steps that have to be taken before being approved for a subsequent loan. First, it is imperative that the borrower stay current on all payments and debts during the period after the short sale. This shows good stewardship and decision- making on the part of the borrower, and begins to establish a positive credit history. Good payment history has to occur throughout the waiting period of up to three years before reapplying. Next, the borrower is required to fill out VA Form 26-1880 (Request for A Certificate of Eligibility) and submit it to the VA Eligibility Center. Once received and approved, the Center will contact the lender to inform them that the borrower is now eligible to re-apply for the loan. One thing that must be verified before the loan is finalized is if the VA paid a compromise claim during the short sale. If this occurred, the borrower is indebted to the U.S. government and is required to repay the amount before being reconsidered for another loan. Overall, it is important to check with the specific VA lender and the VA to find out requirements and information before pursuing a loan for a second time.