Did you know that all VA loans are assumable even if you are not a veteran with VA eligibility? There are two common misunderstandings when it comes to VA loan assumption:
- VA loans are no longer assumable and that
- If they were still assumable, only eligible veterans would be able to take advantage of the program.
The great news is that VA loans are one of the last remaining assumable loans. VA loan assumptions are not restricted to Veterans who have VA eligibility. Anyone can assume a VA loan as long as they meet the occupancy, credit and income guidelines as outlined by the Veterans Administration.
Facts about a VA Loan Assumption
- If you are interested in assuming a VA loan, you are required to apply for a loan assumption with the lender who currently services the mortgage.
- That servicing lender is allowed to charge a processing fee.
- If you are approved, you will be charged a .5% funding fee on the balance of the current loan.
- If you are NOT a Veteran the current Veteran borrower’s eligibility will remain with the loan to insure the VA Guaranty. The current Veteran borrower will not be able to use that portion of their eligibility until that debt is paid off. This is an extremely important piece of information for the seller/current owner to understand.
- If the borrower assuming the loan IS a Veteran, they are able to substitute their own eligibility for the current Veteran borrower’s, allowing the current Veteran borrow to have their entire eligibility restored.
- If a non-Veteran assumes a VA loan and defaults on that loan, the portion of the eligibility that was used to insure that loan will be unavailable to the original Veteran borrower until the paid claim debt is paid off to VA. With interest rates at all-time lows, VA assumptions will become more and more popular.
***As an agent, there will be a lot of attractive VA loans on your future listings. Don’t forget this important marketing detail in your current and future business!
Start using your VA Benefits and be on your way to owning a home of your own. Pre-qualify for a VA Loan Today.
VA Assumptions are for More than Just Veterans was written by Rebekah Radice.
Comments(9)