There seems to be a lot of confusion about the assumable loan listings, and there are sixty-four of them on the market today (5/1/24) that are not under contract. So, let's clear up some of the confusion about how this process works for buyers. Okay, for sure. But hold on, sixty-four listings right now that say they have a VA assumable loan on them? Yes! Wow, there's a lot to talk about then because there's a lot of people who need to know about the VA assumable loans. Yes, so they can take advantage of it. 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. Yeah, so back then (just a couple years ago), most of these assumable loans are like in the twos and the threes, right? For percents today for a VA loan, it's about six and a quarter, about 6.25 or so for a VA loan. For conventional loans, it's at least 1% higher. It's in the 7.25 and up range for conventional. You don't necessarily need to be a veteran to assume these VA loans, yes, and that's 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 you know, that'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, that 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. So, that's just 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. It 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. I can buy another place in Tennessee or wherever they're moving to, right? So, just because you're not a veteran, I wouldn't let that stop me from pursuing that as a buyer. Yes, and each property is different. Some of them will say right there on the listing that it's for VA approved buyers only that can assume it because they want that. So, 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 they gotta do? (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. So the process starts by finding the home(s) you like first) That's a great question. So, 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, that loan servicer, 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 like myself, I can't be involved. But I'm happy to give the information, absolutely, 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. So, it's very different than any other house hunting process where you start with your lender. In this case, it's very different. It's a little bit more time-consuming, but the process would be, the seller would contact their loan servicer and ask for an assumption packet. It's like a packet of information, and they'll send it to them by snail mail. So, it's not electronic. The process is just slow. So, 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. So, even if you're assuming the loan, you're going 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 on 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, then the buyer's agent, like me, would get a copy of that pre-approval, and we would write the offer and send it over to the seller. And then, in the offer, you would want to write in there that the buyer would like to assume the loan, and then it would say, "contingent upon approval from the loan servicer," and then, "earnest money" would be due the next business day after receiving approval. So, it's all kind of, you know, it's all time-sensitive, but it's not money up front to apply for the loan assumption. 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 packet of information from the person assuming the loan. 45 days! And the loan servicer has no financial incentive to work quickly. Once they do complete this approval process, an offer can be accepted, and the regualar 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? So, then, 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. Right, because the loan's already there, you're just taking it over. Exactly. So, there's no loan origination fees, but there are still, like, prorations for taxes, homeowner's insurance, and whatever other fees the seller and buyer agree to in the contract, just like a normal transaction. So, it's a pretty straightforward process once you get through that initial approval stage. And so, you know, if the buyer were to back out for whatever reason after they're approved, the only thing they would lose is their earnest money, just like a normal transaction. And the seller can move on to the next buyer who would have to go through the same process, but, you know, if you're a seller, you would want to choose the buyer who's already been through that process and has been approved. Absolutely. So, for sellers, it's a good thing to have that option available. Yeah, it's a good thing to market it, right? For example, there's a veteran who's moving back to the mainland, and they've got a VA loan, and they're like, "You know what? I want another veteran to take over this loan. I don't want to sell it to somebody who's not a veteran." They could market it as a veteran assumable loan, and that would draw in a lot of veteran buyers. Absolutely, absolutely. And I think, you know, for buyers, it's a great option to explore because, like you said, the interest rates are usually lower, so it could save them a lot of money in the long run. 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. Contact John Keifer with questions about getting a mortgage for the gap: [email protected] Johnny Loans on Instagram Johnny Loans Website When you're assuming a loan, you need to be patient. You know, you can't really speed up the process, so it's not for somebody who's like, "Oh, I need to move in 30 days." It's more like, "I need to move in 60 to 90 days." Absolutely, that's good advice. So, it's not a quick process, but 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.
|
AuthorMarina Yamamoto ArchivesCategories |