Assuming a VA loan can be a convenient and cost-effective way for veterans to finance a new home. By assuming a loan, the buyer can take over an existing mortgage when buying a home. Loan assumption can have numerous advantages for the buyer and seller, and is considered an often overlooked VA benefit. Here are some major reasons to consider assuming a VA loan rather than applying for a new one:
You'll Avoid the Application Process
Applying for a mortgage, whether it's one from the VA or a conventional loan, can be a lengthy process. The various steps involved take months to complete, and there are numerous expenses attached. Down payments, appraisal fees and private mortgage insurance fees are all costs you can expect to come with applying for a new loan. When assuming a loan, you skip the multiple steps and expenses of the application process, saving you time, effort and money.
You Might Keep a Lower Interest Rate
Depending on when the original VA loan was approved, you might be able to get a much lower interest rate than you would with a new loan. Even a percentage difference in interest rates can mean thousands of dollars saved over the life of your mortgage. The opportunity to assume a VA loan with a lower rate is an excellent benefit to consider.
You Can Pay a Lower Funding Fee
Funding fees are mandatory when applying for VA loans. Most veteran borrowers pay an average of 2% of the home's purchase price for the funding fee, and a higher percentage if they've had a VA loan in the past. However, the funding fee for assuming an existing VA loan is much smaller--sometimes as low as 0.05%. The savings from a smaller funding fee is another great benefit of choosing a VA loan over a conventional mortgage.
About the Author
Rudden|Bobruska Team
Gary Rudden, Lisa Rudden, and Nick Bobruska
RUDDEN BOBRUSKA TEAM
What sets your team apart from other real estate teams?
There is no team out in the market that offers what we do. All of us are Realtors, but
we each have specialized roles, which make our team so unique!
After decades of living and selling real estate in the DMV, we have established
ourselves as one of the top real estate teams with our market expertise and
cutting-edge technology. Our savvy high-tech marketing is on every website
and social media source. We have a huge network with other top agents, which
helps to premarket homes and discover homes for buyers before they reach the
open market. Our services include professional in-house staging services, broker
expertise in negotiating and navigating contracts, and buyer representation in all
price ranges. Each client has different needs and we create a marketing plan based
on those needs.
Our most distinct feature is our in-house construction and renovation team. We
are literally a full-service, one-stop shop when selling or buying a home!
How does the in-house construction and renovation team work?
All work is managed and completed through our licensed and bonded construction
crew. No need to call outside contractors. We are like “HGTV,” but we just don’t
have a show! Whether it’s a small makeover or a major renovation, we do it all. Our
sellers love this aspect of our team because we make preparing your home for the
market so seamless. Our buyers love the advice and insight we can give for future
renovations and repairs.
Having a licensed Maryland Home Improvement contractor as part of our team
along with the knowledge, experience, commitment and services that we offer, truly
puts our team as a vanguard in the real estate industry.