VA (Veteran’s Administration) loans are guaranteed credit available to veterans to purchase homes for their residency.
Private lenders like savings and loan companies, banks or mortgage companies provide the financing.
The Veteran’s Administration guarantees that the lender will be paid if the veteran cannot pay the loan for whatever reason.
Below are the facts about VA loans, including assumption rules.
CAN VA LOANS BE ASSUMED?
As of November 17,2009, the laws regarding the assumption of Veteran Administration loans were changed.
If veterans are being stationed elsewhere, being deployed or just wish to sell the homes before it is paid in full‌
‌they no longer have to worry about losing the home or the money invested in the home.
In some cases, the veteran may be able to sell the home to another individual by allowing the individual to just assume the loan.
WHO CAN ASSUME A VA LOAN?
The assumption of a VA loan is not limited to just veterans. The individual wishing to assume does not have to be a veteran.
The individual assuming or taking over and the original borrower may have certain restrictions they must follow, depending on the date the original loan was closed.
◊ If the original mortgage was closed prior to March 1, 1988, there are no restrictions regarding approval from the original lender or the Veteran’s Administration.
However, the veteran is liable if the Veteran’s Administration incurs any loss stemming from the assumption.
◊ If it was closed after March 1, 1988, certain restrictions apply. The major restriction is that the lender must approve the assumption‌
‌in order for the assumption to go through and for the veteran to be released of any liability.
â—Š If the veteran home owner is getting a divorce, he or she will be allowed an unrestricted transfer. The situation involving the scenario is if one of the borrowers are military and the other is non-military.
Both spouses must sign a release of liability to ensure that the borrower leaving the loan is not liable for the loan in the future. Unrestricted transfers must have VA approval.
In all of the above situations, it is to the veteran’s advantage to get the lender’s approval even if it may not appear to be required.
Failure to do so could result in the veteran getting a “due on sale� notice from the VA.
They may also want to check when they will get their eligibility back from the VA.
ADVANTAGES OF A VA LOAN ASSUMPTION
There are times when a loan assumption can be very beneficial to both the veteran and the individual assuming the loan.
◊ The new buyer can benefit if the mortgage’s interest rate is lower than he or she would get with a new one.
â—Š Both the veteran and the buyer can avoid settlement costs.
◊ Rather than take out a second mortgage, the new buyer can pay cash for the difference between the current mortgage’s balance and the agreed-upon selling price if they are different.
â—Š The veteran will no longer be liable for a loan if specific situations would make it difficult to meet the financial obligation of a mortgage.
Mortgage Originator Jimmy Vercellino, specializing in VA loans, helps veterans use their VA loan benefit to their greatest advantage.
Be a proud homeowner today. For more details call 480-351-5904 or visit the site www.valoansforvets.com
VA Loans for Vets 7600 E. Doubletree Ranch Road #200 Scottsdale, AZ 85258 Phone: (480) 351-5904 Email: jimmyv@fcbmtg.com