Assumable VA Loans

[Sean Bozigian]

Hey BP,

I'm working with an investor right now on a VA loan assumption here in the Phoenix metro area and wanted to share some insight because these deals are one of the best ways I'm seeing people win in today's higher rate climate. Over the past year, I've helped several investors purchase homes with assumable loans carrying rates between 2.5 and 4.5 percent. Since many of these homes were bought during 2020 to 2022, there are plenty of opportunities with lower equity positions AND low rates, allowing investors to come in with little cash to close (often under 10%), while locking in a significantly lower payment vs. traditional investment loans.

A few things to know:

• Non veterans CAN assume a VA loan, but the seller has to agree to leave that portion of their VA entitlement tied up with the loan. There are various reasons why a seller may be willing to do this.

• It usually takes longer than a normal close. Sixty to ninety days is common.

• You will need cash to cover the equity gap between the loan balance and the purchase price. Secondary financing is possible for primary residence purchases in many scenarios, but that’s a different topic.

• This process is fully above board and handled directly through the loan servicer. It’s a clean transfer of the mortgage, not to be confused with subject-to or other popular creative financing strategies out there.

• Servicers can be a headache to deal with, but there are companies that already have relationships with them and can facilitate the entire process for a small fee. This has been a huge help for all parties involved in the transactions I have completed.

Whether you’re in my market or not, I’m happy to talk through the details. If nothing else, the more this strategy becomes known, the more it helps veterans better market their homes.

Cheers,

Sean