Should I take a VA home loan on my mothers house?

Question

I just got out of the military, my mother just passed away recently, and I inherited it. Still in probate process, and getting my name on the title. It's being cleaned up, fixed up with new floors, painted walls etc(I have a other thread on it).

My mother owed $50k still on the house, worth $90k. I'm paying a mortgage of $601/month and she was tax exempt because of her being disabled. Mortgage has a HAMP incentive, pay on time, get $1k deducted then by 2019 I believe $5k , totaling $10k deducted. Could get it down to like $35k, in a few years. I can assume the loan or just keeping paying the mortgage under my mothers name, while my name is on the title.

Little did I know, there is a $12k lien on the house due to credit card debt. I'm going to try to have that negotiated and just pay it off in a lump some. Even that is going to be costly.

Should I use a VA home loan on the house? I could be paying a mortgage 1/4 of the payment I'm paying now. At the moment, I don't think it will pass VA inspection standards, the porch stairs is rotten and support is broken.

I plan to rent out the house once I finish college, then buy a other property using the VA home loan for a multi-family, but can I only take out one VA home loan until I pay off the previous one? I don't know really could use as some advice, I appreciate it.

Marshall Martinez · Answer

@Nate S. The VA does have a pretty strict inspection of the home for termites and dry rot. Another thing to consider with a VA loan is the up front funding fee of 2.15% for first time, 3.3% for subsequent use. If you have a disability rating of 10% or more from the VA you are exempt from the funding fee. @Peter Mckernan VA loans do not have monthly mortgage insurance.

In most cases you must pay off your current VA loan to replenish your VA entitlement. With a loan amount of $50k, you may be able to have multiple VA loans. However, they are intended for owner occupied residence.

Hope it helps!

Peter Mckernan · Answer

@Nate S. Sorry to hear about your mother passing away.

As for the question about what you should do with the house, and if you should take the VA loan on the property. Excluding the lien on the property from the credit card debt, just speaking for the VA loan, I would sit down with a loan professional and ask some questions. As a VA loan may be a cheaper monthly option, you may run into some fees down the line, or yearly due to the PMI of the loan. There are a couple lenders on the site that may help you with these questions @Jerry Padilla or @Albert Bui

In regards to the debt, I would talk with the credit card company and see if you can negotiate the $12K down from what it is now like you mentioned. Talk to them about the situation and also the possibility of paying off in a lump sum quickly if the amount was just a little lower.

Nate S. · Answer

With the HAMP incentive my mother had, I want to milk that while the mortgage is under her name. Around 2018-19 I could have up $10k deducted from the principal on the house. Down the line I want leverage so I can have better cash flow. I have the water turned off, taxes are coming up because my mom was exempt from taxes because she was disabled. I'm paying as for right now:

$601/Month - Mortgage & Insurance

A other reason I want a VA home loan so I can get some fixer upper money like $10k to make basic repairs to the house, and get rid of the Lien on the house as well.

$601/Month - Mortgage & Insurance

A other reason I want a VA home loan so I can get some fixer upper money like $10k to make basic repairs to the house, and get rid of the Lien on the house as well.

Bryan O. · Answer

Why do you want to put it under your VA loan? Is the goal here to get lower payments? It seems like on the current schedule you will have it paid off fairly quickly which will let you cash flow better. But if you're a fan of leverage then putting it under VA makes sense.

Keep in mind that the VA loan requires you to live in the property for 1 year. You said you want to fix it and buy something else to live in, so make sure your time horizons match.

Peter Mckernan · Answer

@Marshall Martinez Thank you for the clarification, sorry for the misinformation. I researched and see the funding fee, and no PMI.

http://www.benefits.va.gov/homeloans/purchaseco_lo...

Nate S. · Answer

The lien is on the home in my mother's name due to credit card debt. I want it negotiated down and paid off before my name is on the title. I'm over 10% in disability so the funding fee I shouldn't worry about. It's just getting my house passed with inspection by the VA. The porch is falling apart, needs to be replaced, other fixes like the sidings on the house.

Account Closed · Answer

Is the lien on the home or your mother?

Should I take a VA home loan on my mothers house?

Should I take a VA home loan on my mothers house?

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