Assuming a VA loan - questions!

[Kate Moreland]

Good morning BP! So, my husband and I have had a deal drop into our laps that would be so great! It’d be our fourth door in four years, and would spare us one more move (house hacking with small children ain’t for the faint of heart!). Our friends want us to buy their house by assuming their VA loan. I know that it’s possible and my mortgage broker confirmed that as long as we passed the credit check by the VA - and we have excellent credit so I don’t see a problem there - we could probably do it. How does one go about this? Walk me through Off Marker Loan Assumption For Dummies. I need some resources or guidelines for what we would do and who to call to get this done.

[Mike Johns]

Hello Kate, 

   So I have recently  done a loan assumption myself and found it difficult to find resources. So I thought I’d try and help you but I’m no expert. 

   Everything will be done by whoever your friend has a mortgage through. So first thing you need is to contact them about doing a loan assumption and they should get in contact with you about all the paperwork you have to fill out. In a nutshell that’s it. I know it’s vague and I’m not a really good writer. Here are some things to consider though.

1. Are you going to live in the property? If you are it’s no big deal but if you plan on using it as an investment property be sure the mortgage company will allow it. For example Pennymac wouldn’t let me do a loan assumption unless it was going to be my primary residence, but US bank would. 

2. Are you going to use your VA entitlement or keep the entitlement in your friends name? When I did mine I couldn't use my VA entitlement because I had already used it. So I had to keep the other persons entitlement.

   I hope this helps at least a little and I wish you good luck.