Question:

What about a VA loan assumption?

Answer:

A VA loan assumption has always been possible. Assuming VA mortgages becomes especially popular when rates are rising, and mortgage underwriting criteria are tightened.

VA loans closed before March 1, 1988 are assumable by anyone. Those who assume these loans don't have to be VA qualified for mortgage benefits. The only drawback is for the seller who remains responsible if the buyer defaults.

A way out for the seller is that they request a release from liability from the lender after the buyer is underwritten by the VA. In case the new homeowner defaults, the collection agency will go after the seller, so a release of liability is necessary for protection. Sellers, though, are not required to demand that the buyer is underwritten - that is, for loans before March 1, 1988.

For loans after that date, lenders or the VA have to underwrite the buyer, much as they would a new borrower.

Another common case of VA mortgage assumptions is when a divorce takes place and the parties wish to obtain a release of liability.

If a VA loan dated after March 1, 1988 is assumed without permission of the loan holder, this may result in a due on sale notice from the lender, even if mortgage payments are made on time.

Recommended helpful present and future homeowners links:
Why: Refinance to a fixed rate loan while mortgage rates are still low.
Link:
Why: Because FHA loans are insured by the US Federal Government they have very competitive interest rates and are easier to qualify.
Link:
Why: Know and protect your credit report and score.
Link: See All 3 National Credit Scores & 3 Reports Instantly, Online & Free
Why: Find your next home and save money.
Link: Search thousands of foreclosures. Free 7-day trial.
Link this QnA Print del.icio.us Digg
Was this Mortgage QnA helpful?
Not at all
  • Currently 3/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
 Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA:

Common misspellings: mortage and morgage