How best to market an assumable VA loan?

Question

Hello BP Family!

Like many of you I myself am a real estate agent! With the landscape of today's interest rates how would you go about marketing a property for sale that has an assumable loans? Are you aware of any restrictions in place? Looking forward to any and all suggestions and advice!

Mindy Jensen · Answer

Learn about the loan products you're trying to market to make sure you're adequately representing your client.

A VA loan is assumable by anyone - not just those who qualify for a VA loan through their service. HOWEVER, it's an almost 100% bad idea for the holder of said loan to allow a non-vet to assume their loan unless they know that person.

The VA loan that gets assumed by the vet transfers the entitlement to the new borrower.
The VA loan that gets assumed by a non vet binds the entitlement to the original borrower and if that new borrower defaults, the original borrower loses that amount of their entitlement forever.

An FHA loan can be assumed by anyone who qualifies for the loan.

But in all cases, the new borrower will most likely have to bring an enormous amount of cash to closing. There's the down payment, the closing costs AND the delta between what's left on the loan and their offered price.

AND don't forget the time involved to assume the loan. You're going through a process, and it can take 3 months or more. In order for me, the seller, to assume the risk of you not qualifying for the loan, you losing your job at the last minute, you changing your mind, etc, I'd want a higher offer price - which means you're bringing even more money to the table.

The idea of an assumable loan is awesome, but frequently does not pan out. I wonder if there are any stats to show what percentage of properties marketed with an assumable loan actually had the loan assumed?

Randy Rodenhouse · Answer

There are now a few website platforms where they list houses with assumable loans like Assumable (I think .io) and Roam. Just google these two to get more info. Of course, sometimes it's difficult to sell a house this way if you have alot of equity since the buyer will have to come to the closing table with that amount of money before assuming the loan.

How best to market an assumable VA loan?

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