Understanding VA Assumable Home Loans from a Veteran’s Perspective
Veterans have been through the wringer, putting their lives on the line for our country and returning home with high hopes of living in peace and prosperity. Home ownership is one way in which veterans strive for this, but the housing market fluctuates, presenting challenges that can hinder a veteran’s ability to buy and maintain payments on a home. Luckily, there are VA assumable home loans and mortgages to help provide the flexibility that veterans and their loved ones deserve.
What Is Assuming a VA Home Loan?
VA assumable loans are mortgages. They allow a new borrower, such as a spouse, loved one or new homebuyer to assume the responsibility of a home loan if a veteran sells a home that they have purchased with a VA home loan. Essentially, the new borrower takes over payment of a veteran’s existing loan.
Existing terms and conditions, like repayment schedules, repayment amounts, and interest rates, are the same, but the loan agreement is signed by a new borrower with a new name. The new borrower agrees to assume the remaining balance on the home loan. This process helps in one of two ways. It can either release the veteran from the responsibility of repayment so they can move or return to active duty. Or the VA assumable home loan can help a new borrower take over payments that a veteran cannot afford, allowing the veteran to maintain residence in a home.
The Benefits of Assuming a VA Home Loan
In many cases, VA assumable home loans allow veterans to get out of their mortgage so they can move and live elsewhere. In that scenario, veterans are released from repayment obligations, and the assumable loan could make the property more valuable to potential buyers if the new borrower decides to sell.
For new borrowers, veteran assumable loans can be quicker and more straightforward than a new home loan application. The terms have already been set, and conditions have already been met, which means all a new borrower has to do is assume responsibility and make the payment.
To apply for a VA assumable home loan, new borrowers must meet a number of lender requirements and conditions. Good credit and income expectations are a must, but there are many more. The lender must then approve the loan, requiring a signed release of liability to ensure the veteran is no longer responsible for the original loan.
Things to Consider With VA Assumable Home Loans
- Can a non-veteran assume a VA loan? Veteran assumable loans can be passed from veterans to civilians, but sometimes, a veteran’s entitlement to a home loan can remain tied to the original mortgage. This could be an issue if veterans seek to use their entitlement for future home loans.
- Some lenders don’t allow VA assumable home loans. Those that do often charge fees and have special requirements for veterans and new borrowers.
- Sometimes, the new borrower of a veteran assumable loan must pay the difference between a home’s market value and the remaining mortgage balance.
- It may sometimes take up to 60 to 90 days to close a sale with a veteran assumable loan, as the paperwork does take more time.
- If there is a difference in the final sale price compared to the price put in the application, that difference must be paid in cash, so it’s important to make sure you are close to the final sales price up front or have some cash ready on hand for any price differences.
Summing Up
Veterans deserve the right to home ownership as much as anyone else, making VA Assumable Home loans essential in the home-buying marketplace. For the last 15 years, I have been serving veterans in the Dallas / Fort Worth Metroplex and it makes me proud to help veterans and their loved ones live the best life they can. And knowing how complex dealing with veteran assumable loans can be, I’m especially proud of my ability to guide veterans through the maze of paperwork and requirements to help them realize their real estate dreams.
So if you want to know more about how veteran assumable loans can help you realize your dreams of home ownership give me a call on (214)789-7111 or click here to send me a message.
– Ginger
