VA Assumable Loan as a Civilian

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP are you still here?
I'm just nosy and like the pp above me, am really curious what the situation is?
Do you already have an accepted offer on a house, using assuming their VA loan? Or were you just hoping to make such an offer?

OP here! No current contract underway. I'm just exploring options at this point and curious. I recently learned that it is legal for civilians to assume VA loans, so I created this post to try to learn more. Assuming a loan with an ultra-low pandemic-era interest rate would increase our buying power significantly compared to current interest rates... but most assumable loans are VA loans, and my household is entirely civilian. Hence the question.

FHA loans are also assumable. It would probably be hard to find one, but it’s an option.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP are you still here?
I'm just nosy and like the pp above me, am really curious what the situation is?
Do you already have an accepted offer on a house, using assuming their VA loan? Or were you just hoping to make such an offer?

OP here! No current contract underway. I'm just exploring options at this point and curious. I recently learned that it is legal for civilians to assume VA loans, so I created this post to try to learn more. Assuming a loan with an ultra-low pandemic-era interest rate would increase our buying power significantly compared to current interest rates... but most assumable loans are VA loans, and my household is entirely civilian. Hence the question.

Doesn't hurt to ask, I guess. I was surprised to learn this was even allowed, and even more surprised to read here that some posters would be fine giving up their VA loan.
A pp already mentioned this, but I wanted to emphasize, that you need to come up with the difference in the sales price and the loan. So say for example, you are buying the house for $800k, and the veteran seller still owes $500,000 on their VA loan. You need to come up with that $300k difference--you can't use the VA loan to finance more than what the original loan holder took out.

I'm aware, but the equity payment is in lieu of a down payment. There is no down payment when assuming a loan, just covering the equity gap. If someone bought in 2020 and snagged a 2.5% interest rate, they only have 5 years of payments behind them, so the equity may only be between 10% and 20% of the home value... so, no more than a down payment. Obviously if they have more years of mortgage payments behind them, you could be talking about a much higher % of the home's value.

You’re not factoring in appreciation there, either. PP who posted that we offered a home with a VA loan. Redfin shows the value at 1.09 in 2021 and we sold last year for 1.7. Those numbers aren’t super accurate but it was at least a half million during that time period in appreciation alone.

Good luck finding a home that was purchased within the last five years, has an assumable VA loan that they are willing to give up, is what you are looking for, and you have your bid accepted on. I mean maybe it can happen but that’s highly unlikely.

I am the 1.65m remaining on the loan person. Seriously looking for a dramatic change in pace of life - we could buy a house with cash where we want to go with the money we made on the sale of our current house.

[Anonymous]

Did you find anything, OP?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP are you still here?
I'm just nosy and like the pp above me, am really curious what the situation is?
Do you already have an accepted offer on a house, using assuming their VA loan? Or were you just hoping to make such an offer?

OP here! No current contract underway. I'm just exploring options at this point and curious. I recently learned that it is legal for civilians to assume VA loans, so I created this post to try to learn more. Assuming a loan with an ultra-low pandemic-era interest rate would increase our buying power significantly compared to current interest rates... but most assumable loans are VA loans, and my household is entirely civilian. Hence the question.

Most people aren't going to agree with this.

[Anonymous]

DH is a veteran and we have a VA 3.3% loan with $430,000 remaining. House is worth 800K-1M.

We are considering downsizing to a $400K one level house. If we sold current house, we would probably net enough to pay cash for new house.

So yes, a buyer would need about $400,000 cash down payment to assume our 3.3% VA mortgage, but we are not about to just give it away for no benefit to us.

The amount they would save over financing $430,000 at 6.6% is huge. I haven't worked out the numbers, but I would expect at least 50K (?) over asking to make it worth losing our VA eligibility forever. Otherwise, why not sell for asking to someone getting their own financing and we keep VA eligibility in our back pocket.

Now, if values sink and we are desperate to sell at some point (and we don't think we will need VA any longer), then I guess we will use the VA assumable as a pot sweetener.

Our mountains and forests attract many cash buyers, so I suspect someone planning to pay all cash, might like to keep some of their assets invested and take on the 3.3% mortgage.

If you are looking to assume a VA mortgage, your offer needs to be higher (possibly over asking) than any other offer. And you probably need a large cash down payment.

[Anonymous]

3.3% PP - just googled and VA does allow a buyer to assume a VA loan AND get a 2nd loan, but the 2nd loan has to be subordinate to the VA loan. No idea if it is easy to get the 2nd lender to agree to be subordinate.

Also, just for info, a Veteran can take out a second VA loan as long as they qualify to pay for both and live in the 2nd loan house. Google for details.