Has anyone had any experience with assuming a VA mortgage??

Question

I was wondering if anyone has ever bought a property through a VA assumable mortgage? I have the opportunity to purchase a decent 3 family with a lot of potential, but I have never used this method of purchase in the past. Seems like a pretty easy way around the 20% cash down for traditional financing.  Any and all input is much appreciated!

Vince Leydet · Answer

Chris Mason

So the catch to assuming a VA loan is if the person has equity, you have to cash out there equity.  In this example the owner owed $70k and we agreed on $90k sale price (didn't know his balance at the time). So I would of had to put down the $20k which now makes sense.  It's actually more than just putting down the 20% and securing my own financing. Needless to say this did not work in this instance.

Rajeev Kotyan · Answer

Both of you, thanks for the input, it answered some of the questions I had regarding VA loans and the assume-ability.

Vince Leydet · Answer

Chris thanks for your input! I'm waiting to hear back form my attorney on the last bullet point as I had the same question.  Ill keep you posted if there is progress and things move ahead.

Chris Mason · Answer

I've never personally been involved in that because it's the loan's current servicer, not the originator from X years ago, that is involved.

Bullet points from my understanding:

* The seller permanently loses all or part of their VA loan entitlement until such time as you pay that mortgage off in full.

* You have to be qualified per all the normal VA loan guidelines, except for the requirement that you be a veteran. VA guidelines are pretty damn lax compared to fannie/freddie.

* Nominal fee, think of it as discount points to get the killer VA rate without being a veteran.

* Tougher to get through if your income/credit/asset situation is wonky, because you're trying to qualify for a mortgage by going through a glorified debt collections agency call center type setup (what is mortgage loan servicing, but that?) and not a firm that is focused on finding and qualifying people for mortgages.

* I have no idea if you can do this as someone that does not intend to live there, that would be the first question to ask before you waste too much of your time.

But ya, in theory this should be something that really helps veterans command a premium price for the home they are selling, but in practice does not. Probably mostly bullet point #4 is why. Try it and post back with your experiences!