Buy Using The Seller’s VA Loan
When you are buying a home with an existing VA loan, you can choose to step into the seller’s shoes as regards the existing loan. You can buy using the seller’s VA loan if they agree to it. The simplest way to come to an agreement, is for you to be Active Duty or a Veteran so that your Certificate of Eligibility simply substitutes theirs as the guarantee on the home. If the seller has had the home more than a few months, you will also have to consider paying a premium for the home.
Why Is This Worth It?
With rates on the rise, you are likely looking at a home whose mortgage interest rate is below the current rate. Depending how much time has gone by from when they got their mortgage to when you are buying, this could be a substantially lower interest rate; which means a lower monthly payment for you. Also, the longer the seller has had the mortgage, the greater the portion of the monthly payment that goes to paying of the loan. The flip side of this is that the fewer years remaining on the existing mortgage, the greater the premium expected by the seller. A properly negotiated agreement will benefit both parties as the seller will have enough to buy their next home and the buyer will have lower monthly payments without any mortgage insurance.
Can Anyone Do This?
In a word, yes! Even if the buyer is not on Active Duty or a Veteran, they can still assume the VA loan right from where the seller leaves off. For example, if escrow closes exactly at the end of the 5th year of a 30 year mortgage, the buyer will be making the exact same monthly payment but only for 25 years! Obviously, this is a considerable benefit to the buyer. Additionally, the seller will have to leave their Certificate of Eligibility tied to this home until the buyer pays off the loan. Thus the seller will need to be properly compensated for their willingness to do so. It is these two buyer-benefits that will form the basis for the premium due to the seller.
As a nationally certified Military Relocation Professional (MRP), I can walk you (and the seller) through all of this and help you buy the home of dreams. You can reach me at 760 622 5087 or email me at [email protected]