One advantage of having a VA mortgage is that it is assumable. If the interest rates skyrocketed and a buyer wanted to assume the seller’s VA loan instead of obtaining a new loan with a high interest rate, it can be done with approval of VA. If the loan was originated before March 1, 1988, the seller would not need approval to transfer the loan.
If the assumer is a veteran, the seller has the ability to utilize the Certificate of Eligibility to purchase another property since the veteran has substituted his/her entitlement in place of the seller’s. If the assumer is not a veteran, the seller’s Certificate of Eligibility is still tied to the property and cannot be used.
The seller is also released from liability if the buyer who assumed the veteran’s loan misses mortgage payments. However, if the property forecloses, the veteran’s entitlement may not be restored.
Colorado Springs Real Estate Agent, Patricia Beck, providing real estate services to home buyers and sellers.