Is There a VA Loan In Your Future?

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In todays real estate and mortgage market, assuming an existing VA loan, when available, may be your best financing option

Assuming a VA loan means taking over the current mortgage of a home that has a VA (Department of Veterans Affairs) loan on it—often at a lower interest rate than current market rates. Here’s how to assume a VA loan and what to watch out for:

✅ Steps to Assume a VA Loan

  1. Verify Assumability
    • VA loans closed before March 1, 1988 are generally freely assumable (no lender approval needed).
    • VA loans closed on or after March 1, 1988 require lender and VA approval.
  2. Meet Eligibility Criteria
    • You do not have to be a veteran to assume a VA loan.
    • You must qualify financially: creditworthiness, income verification, and debt-to-income ratio will be reviewed.
  3. Contact the Loan Servicer
    • Reach out to the current servicer of the VA loan to begin the assumption process.
    • Request an assumption package or application.
  4. Submit Application & Pay Fees
    • Complete the lender’s assumption application.
    • Fees typically include:
      • Assumption fee (usually $300–$500)
      • VA funding fee (0.5% of the loan balance)
      • Closing costs and title transfer expenses
  5. Receive Approval
    • If approved, you’ll sign an Assumption Agreement and related legal documents.
    • The lender will formally transfer the loan into your name.
  6. Close the Transaction
    • Finalize the property transfer via a real estate closing, with title work and possibly an escrow account setup.

⚠️ Important Considerations

  • VA Entitlement Tied Up: If the seller allows you to assume their loan and you’re not a veteran using your own entitlement, the seller’s VA entitlement stays tied to the loan until it’s paid off or refinanced.
  • Release of Liability: The seller should ensure the lender issues a Release of Liability, so they are not held responsible if you default.
  • No Cash-Out: If the home’s market value is higher than the loan balance, you’ll need to pay the difference in cash or arrange secondary financing.

🔍 When Is It a Good Idea?

  • When interest rates today are much higher than the VA loan being assumed.
  • When you want to avoid a full new loan underwriting process.
  • When the home seller is offering favorable terms or low equity buy-in.

Any real estate transaction has  several steps and several moving parts which must be effectively managed to assure a clean transfer of title and proper assumption of the VA loan. No one (buyers, sellers, agents) wants problems after money and title changes hands.

Always engage an experienced real estate agent and their recommended professionals for guidance, start to finish.

Can I help? Absolutely. Call me at 253-219-2162.

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