Assuming a VA Loan
A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA) and is available to eligible service members, veterans, and, in some cases, their families.
The VA doesn’t directly lend money; instead, it provides a guarantee on loans made by approved lenders. This guarantee enables lenders to offer favorable terms and less strict requirements than conventional loans, also allowing the loan to be assumed by a subsequent buyer.
Currently, we are seeing renewed interest in the assumption of VA loans from buyers seeking a lower interest rate from what is currently available on the market.
In fact, I represented sellers involved in such a transaction earlier this year. While often a slow and paper-intensive process, an assumption of the seller’s loan balance, interest rate, and length of loan can lead to substantial savings for borrowers, as well as a reduction in up front settlement fees.
