Owners of VA home loans sometimes find that their plans and goals for the future have shifted, and they want to back out of the loan they’ve previously committed to. So, rather than selling their home, many opt for having their VA home loan assumed by another buyer through their assumable loan, a more straightforward process.
From the perspective of a buyer, this is a great way to save money. Rather than going through the tedious process of getting prequalified for a mortgage and finding a home, they can assume someone else’s mortgage.
In this case, the buyer takes on the monthly mortgage payments of the original buyers as the debt and property are signed over from them. Therefore, the Department of Veterans Affairs becomes absolved of any responsibility or liability related to the loan.
While the process is not a difficult one, there are still myths associated with VA mortgage assumptions. Let’s debunk them.
Myth: You Have to Be a Veteran to Assume a Veteran Home Loan
Veteran home loans themselves are reserved for veterans, as well as members currently serving in the military, and surviving spouses who meet the other qualifications.
However, the sole requirement set to assume a loan is that the new buyer meets the financial qualifications to do so. Therefore, the average person is able to take on a VA loan.
Myth: The Original Buyer’s Legal Liability Disappears after Veteran Home Loan Assumption
When the new owner of the loan assumes it, the original buyer isn’t automatically rid of any legal liability. Instead, the homeowner will need to request a release of liability from the lender.
Without doing this, the VA homeowner could potentially suffer consequences due to specific actions of the assumer, such as late mortgage payments.
Myth: It’s More Costly to Assume a Veteran Home Loan
Actually, assuming a house often results in a lower interest rate for the average home buyer.
Additionally, closing costs will be less than getting a new mortgage, as the VA places limits on the amount that assumption fees can be. Therefore, they are more affordable, as opposed to thousands of dollars like regular mortgage closing costs.
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Do you have questions about veteran home loan assumptions? Looking for more information? We’d love to help. Call our office today to speak to an expert and learn more about the VA home loan assumption process. We look forward to hearing from you soon!