VA loans

VA Loan Assumptions: A Reader Question

September 25, 2014

VA Loan Assumptions: A Reader Question

052-logoA reader asks, “I currently have a VA Loan with $130,000 balance and need to sell the property due to health reasons. I venture the market price will be $129,000. How can I sell the property via assumable means and not have to pay commissions and other costs related to the sale. What is the best process to liquidate the mortgage and property?”

We couldn’t comment on the reader’s question about the best way to “liquidate the mortgage and the property” but there is one important issue that should be addressed where VA loan assumptions are concerned.

Most of today’s VA mortgages will require the participation of the lender in order to process a VA loan assumption. VA loans are assumable, meaning the current owner can pass on the existing mortgage to another borrower who is willing to assume responsibility for the loan.

The new owner would have to fill out paperwork, get a credit check, etc. This means the lender would verify income and employment, pull FICO scores, and other qualifying data.

VA loan assumptions are not the same as selling the property outright. There would be no cash to the current owner since the loan is being transferred to another person. VA loan assumptions can be done between two veterans or between the veteran borrower and a non-veteran. There is no restriction on who can assume a VA mortgage aside from the usual credit qualifying process.

Do you have questions about VA home loans? Ask us in the comments section.

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