Save Thousands on Your Mortgage: The Hidden Benefits of Assuming a VA Loan with a Lower Interest Rate

Save Thousands on Your Mortgage: The Hidden Benefits of Assuming a VA Loan with a Lower Interest Rate

  • Audrey Alessi
  • 06/30/24

In an economy of uncertainty where interest rates are currently in the mid-6% range and don’t seem to be dropping anytime soon, homebuyers are seeking creative solutions to manage their mortgage costs. One option that often goes unnoticed, though we are seeing a lot more of it currently, is the opportunity to assume a VA loan. This unique opportunity is helping people save thousands on their mortgage each month. Here’s why assuming a VA loan could be a smart financial move for eligible homebuyers.

What is a VA Loan Assumption?

A VA loan assumption allows a homebuyer to take over the existing mortgage of the home seller. This means that instead of securing a new loan with potentially higher interest rates, the buyer assumes the seller’s current VA loan, including its interest rate and repayment terms. This option is available to both veterans and non-veterans, provided they meet the lender’s requirements.

The Benefits of Assuming a VA Loan

  1. Lower Interest Rates

    The most compelling advantage of assuming a VA loan is the potential for a lower interest rate. In an environment where interest rates are rising, securing a loan with a lower rate than what is currently available can lead to substantial savings over the life of the loan. Even a difference of a fraction of a percentage point can result in significant cost savings.

  2. Cost Savings on Closing Costs

    Traditional home loans often come with substantial closing costs, including loan origination fees, appraisal fees, and more. When assuming a VA loan, these costs can be considerably lower, as the loan is already in place. This can reduce the upfront expenses associated with buying a home.

  3. No Need for a New Appraisal

    In many cases, assuming a VA loan may not require a new appraisal of the property. This can save time and money, allowing for a smoother and quicker transaction.

Considerations and Potential Drawbacks

While there are many benefits, it’s important to consider potential drawbacks. For instance, the buyer may need to make a sizable down payment if the home’s sale price exceeds the remaining loan balance. Additionally, the qualification process for assuming a VA loan is not necessarily streamlined. In fact, VA assumable loans can take significantly longer, with escrow periods ranging from 90 to 120 days, instead of the standard 30 to 45 days. However, the potential savings from a lower interest rate can make this wait worthwhile.

Conclusion

Assuming a VA loan is a fantastic opportunity for homebuyers looking to save money and secure a lower interest rate. With the potential for significant financial benefits, this is an option worth exploring. Check to see if you qualify and take advantage of this unique chance to make your homeownership dreams more affordable.

Before proceeding, it’s crucial to consult with a knowledgeable mortgage professional to fully understand the process and ensure it aligns with your financial goals. With careful planning and the right guidance, assuming a VA loan can be a strategic move in today’s housing market.

Special Opportunity: Moana Pacific Condo with Assumable VA Loan

Don't miss out on a fantastic opportunity to own a condo in the highly desirable Moana Pacific. This condo has a VA assumable loan at an incredibly low interest rate of 3.875%, with current monthly mortgage payments of $3,923 for principal and interest. Including HOA fees, the total monthly cost is $4,941. The remaining loan balance is $753,843.92, and the asking price is $915,000, which means the buyer would need to provide the difference in cash. Located at 1296 Kapiolani Blvd #2309, Honolulu, HI, this condo is in a prime location within walking distance to Ala Moana Beach and much more. Take advantage of this unique opportunity to save on your mortgage and enjoy a fantastic lifestyle in Honolulu.

Work With Audrey

Audrey chose a career in real estate because she realized her potential was being able to connect people to the opportunity to create wealth through real estate within the community, Audrey thrives by remembering this one thing every day. Contact Audrey today!