let's clear up some of the confusion about how the process of assuming a seller's loan on the house works for buyers: WHAT IS AN ASSUMABLE LOAN? There's a lot to talk about the VA assumable loans. Learn how you can take advantage of lower interest rates. It's a pretty cool opportunity if you wanted to just search through those listings alone and see what you can get! So basically, an assumable loan means that you're taking over the seller's existing loan on the house that has a lower interest rate from a couple of years ago versus interest rate now. Most of the assumable-loan listings for sale today have interest rates from a few years ago, which means the interest rates are in the twos and threes. To get a new VA loan today, it's about 6.25%. For conventional loans, it's at least 1% higher - in the 7.25 and up range. WHO CAN TAKE OVER A VA LOAN? VETERANS ONLY, OR ANYONE? You don't necessarily need to be a veteran to assume these VA loans! This is really important to know. A lot of people don't know that a civilian can also assume a VA loan. It's totally doable, and people do it all the time. Of course, the caveat to that is that the seller's VA loan entitlement stays with that home if a civilian takes over. So, he can't take that entitlement to his next property, but it's okay. Yes, you can have more than one VA loan at a time. But if you are a VA eligible buyer, you have a little bit of an advantage because if you're assuming that loan, you will have more listings to choose from. If it's a veteran-to-veteran assumption, then just like a normal VA loan, the buyer's VA entitlement would be used for the loan on the home, and then the seller's VA entitlement would be cleared up, restored. Like a normal transaction. The offer makes it a little bit stronger if it's coming from a veteran who can assume the entitlement. However, you just don't know what their circumstances are for the seller. They could be like, okay, I only want a veteran to assume my loan because I need my entitlement restored. Other sellers might be like, you know what, I don't even care. I don't need it. I've got enough entitlement left over. They can still buy another place wherever they're moving to, right? So, just because you're not a veteran, I wouldn't let that stop you from pursuing that as a buyer. Each property and seller's situation is different. Work with us Beach Villa Realty to find properties that work for your situation! WHAT IS THE FIRST STEP? Let's start with the process. Let's say someone finds a house they like and it has an assumable loan. What's the first step for you as the buyer? Instead of starting with your lender to get pre-approved, start with you Realtor. You will need to get approved by the seller's mortgage provider, rather than your own. So the process starts by finding the home(s) you like first, which means working with your realtor and VA lender simultaneously. STEP #1: - Have your realtor find sellers offering assumable loans. He/She will also find out the balances of the assumable loans and how much of a gap there is. Not working with a realtor yet? Get started with Marina Yamamoto who specializes in Assumable VA transactions! - Talk to a lender to understand how much you qualify for. You need to know what your limit is so you don't waste time on homes that are outside the budget of what you can do. However, here's what a lot of people don't know and they need to know. Whoever the seller's lender is, whoever the seller is making their monthly payment to, we'll call them the loan servicer, that company is the only one that can say yes or no to the assumption. And they do all the approving, the pre-approvals, everything is done through that loan servicer. There's no outside mortgage broker involved. John Keifer is happy to give information, "because as a fellow veteran, I want veterans to get the homes they want and deserve, whether I can be involved or not, I'm going to help them out." Contact John Keifer with questions about getting a mortgage for the gap: [email protected] Johnny Loans on Instagram Johnny Loans Website STEP #2: THE ASSUMPTION PACKET Once you find a home you love, your realtor representing you as the buyer will request an assumption packet from the seller's agent. - The seller will contact their loan servicer and ask for an assumption packet.This packet of information will be sent by snail mail. It's not electronic. It's going to come to them in the mail, and then from there, they would fill out the information that's needed from them as the seller, and then they would pass that packet of information onto the buyer, and then the buyer would fill out their section which is a full loan application. Even if you're assuming the loan, you will need to be fully approved as if you were buying it yourself. You need to have your finances in order, and everything's got to be up to date because they're going to do an underwrite for you. It's really just information about the buyer and then the loan servicer will do a pre-approval on that buyer. And then if the buyer passes that pre-approval, the the buyer's agent will get a copy of that pre-approval, and we would write the offer and send it over to the seller. HOW LONG DOES IT TAKE TO PURCHASE A HOME WHEN ASSUMING THE SELLER'S LOAN? The process of assuming a loan takes longer than a normal transaction. The shortest time I've seen so far is 60 days. What the guideline says is that the loan servicer has 45 days to make a decision after they get the full assumption packet of information from the person assuming the loan. The loan servicer has no financial incentive to work quickly. Once they do complete this approval process, an offer can be accepted, and the regular escrow timeline begins which is an average length of 30 to 45 more days. Let's say the buyer goes through this process, they get approved, everything's good to go, what happens next? At that point, it's a normal transaction from there. Once you're approved and you're under contract, you would start your escrow process, and your closing would be just like any other closing. The only difference is that your closing costs would be lower because you're not originating a brand-new loan. The loan is already there, you're just taking it over. There's no loan origination fees, but there are still prorations for taxes, homeowner's insurance, and whatever other fees the seller and buyer agree to in the contract, just like a normal transaction. It's a pretty straightforward process once you get through that initial approval stage. HOW DO YOU PAY THE DIFFERENCE BETWEEN THE ASSUMABLE LOAN AND THE PURCHASE PRICE? A couple of things to think about for buyers, if you're buying a home that's worth more than the loan balance that's being assumed. You might need to come up with some cash to cover the difference, and that's called gap funding. The options are to pay it with cash, use a Home Equity Line of Credit, or get another mortgage to fund the gap. When you're assuming a loan, you need to be patient. You can't really speed up the process, so it's not for somebody who needs to move in 30 days. If you have more than 60 to 90 days, start with step #1 NOW. It can definitely be worth it in terms of the savings and the opportunity to get into a home with a lower interest rate. And for my non-veteran buyers, I would say, don't let the fact that you're not a veteran stop you from pursuing a VA assumable loan! 2 bed / 2 bath townhome $740,000ASSUMABLE VA LOAN @ 3%! - Current monthly payment $3,080 - Current mortgage balance $619,537 - Loan Serv. Flag Star Bank. VIEW FULL LISTING HERE 2 bed /3 bath condo $775,0002.375% VA assumable mortgage for a veteran who has at least a 10% downpayment and will substitute his entitlement (contingent upon the seller's VA eligibility being released)! Mortgage balance as of March 2024 = 652644.46; Monthly PITI=2915.77 VIEW FULL LISTING HERE 3 bed / 2 bath Home $949,9992.85 VA assumable loan. VIEW FULL LISTING HERE 3 bed / 2.5 bath home $865,000VA loan info for possible assumption: 2.75% rate , $608,000 balance, Freedom Mortgage Servicer. VIEW FULL LISTING HERE
There's a bunch of assumable VA loan listings on the island of Oahu right now! Sellers are catching on to the fact that it can help get their house sold. If you can come up with the difference, or get a loan for the remaining balance, you can save a pretty penny by assuming a lower interest rate! Here are 4 listings available in Makakilo today with an assumable VA loan. As always, if you would like to get more info, schedule a showing, or make an offer, contact Marina Yamamoto at 808-989-8183. 3 bed/2 bath condo for $585,000The remaining balance is about $550,000, rate is 5.625% but they’re still in buy down period of 4.625% till May of 2025. View Full listing here. 4 bed/2 bath house $855,000Assumable VA loan option is available at 2.375% interest rate, contingent upon Seller's VA eligibility being released. View Full listing here. 4 bed /2 bath Condo $569,000Assumable Loan's Interest Rate: 2.25% / Balance: $408,000 / Payment: $1,936.36 (includes taxes/insurance). Maintenance Fee: $762.27. View Full Listing Here. ![]() 4 bed/ 3 bath house $1,260,000Current mortgage balance is $746,945.41. Monthly mortgage is $3,715.09 with 2.75% interest rate. Click here to view full listing.
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