It is important to understand the definition of an assumable loan before starting the process. An assumable mortgage loan is defined as allowing a home buyer to take over the seller’s loan without changing any of the terms. Essentially, you, the new home buyer are stepping in for the seller of the home using the exact same terms term they received when they first bought the home. There are a couple of different ways you can assume the terms of a VA loan from another home seller.
Understanding Some of the Assumable Basics
First of all, you must be a qualified veteran before you can assume a VA loan. If you are not a veteran or you are not a qualified veteran, you cannot assume other VA loans. You must also qualify for the basic standards set forth by the VA regarding mortgage payment. Many times, on the last page of the mortgage note, you will see the term “assumable on credit approval,” which allows the lender to run a detailed credit report on the persona assuming the loan.
Here are a couple of very important details to keep in mind for both the seller and borrower:
The seller loses their VA eligibility to use on a new loan, plus the seller is still obligated to pay the loan if the assumable party defaults on the mortgage loan. Both parties should understand this rule thoroughly before pursuing the transaction.
Contact one of our loan consultants to learn more about this program.