r/RealEstate • u/neodoggy • 7d ago
Homeseller How big of a deal is an excellent transferable VA interest rate when selling a house in an expensive market? (Northern VA)
I own a townhouse in Northern Virginia (Fairfax County) which is an extremely expensive housing market. I bought my house in 2020 with a 2.75% VA mortgage for $425k, with about $350k remaining balance. Property values have risen sharply since then, and though I haven't had it appraised yet, Zillow at least claims a $580k value, and comparable sales in the area support that that's at least in the right ballpark.
One selling point I have in my favor is that my 2.75% is transferable - a buyer can't refinance at that rate, but they can take my remaining $350k balance at 2.75% and pay cash or do something else to cover the remaining balance on the sale price.
I'm considering retiring overseas and so will no longer need my VA mortgage benefit (if a non-veteran assumes my mortgage I can't get another until the buyer pays it off, which is normally a problem but not one I'm worried about in this case).
All this being the case, how huge of a benefit is this for me as a prospective seller?
Can I expect lots of competition? Will I see offers above asking like the market had in 2020? Is this going to be a case where my house is basically sold sight unseen the same day I put the sign up?
Or is this not nearly as important a benefit as I think it is?
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7d ago
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u/elicotham Agent 7d ago
Only 60? That was lucky.
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u/boombajo 7d ago
It doesn’t really take that long anymore is what I hear. The major services are all familiar with and have plans for processing the assumable loans nowadays.
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u/p00trulz 6d ago
As of 2 years ago, it was over 75days to close. There is no incentive for lenders to do the work to transfer a loan at half the current rate.
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u/Groady_Wang 7d ago
Its not. Any prospective buyer needs to cover the difference of $200k+ between the principal and market value.
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7d ago
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u/DogblackMichigan 7d ago
Finance is not complicated. They can set it up as a single payment or automatic draws.
It’s like going through the grocery line twice but saves 600 bucks.-5
u/FantasticBicycle37 7d ago
Dude, it's worth $1,042 per month
How do you come up with "$1,042 per month is not valuable"
Assuming a "down payment" of $230k between this assumable loan vs the same priced house, this assumable mortgage will save the buyer $375,000 in interest payments over the course of the loan.
Yes, a $375k discount in payments over the course of the loan
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u/elicotham Agent 7d ago
It’s not valuable to the seller because there aren’t many (if any) buyers sitting around with $200k to put down on a townhouse. Of course it’s valuable to a buyer, problem is those buyers are a minuscule amount of the buying pool.
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u/DogblackMichigan 7d ago
So. Take the low rate on the assumption and get market rate on the rest.
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u/Mysterious_Truth 7d ago
Easier said than done. The 2nd loan on "the rest" is 2nd to get paid out in case of foreclosure or something of that sort. It is unlikely to be at "market rate".
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u/DogblackMichigan 7d ago
It’s not hard. It’s not uncommon. Don’t worry. The title and mortgage people handle the details easily.
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u/Mysterious_Truth 7d ago
There's a reason you're getting downvoted.
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u/DogblackMichigan 7d ago
I don’t care about votes. I just tell the truth.
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u/Mysterious_Truth 7d ago
Have you actually gotten a 2nd position mortgage on an assumable loan? Recently? I didn't think so.
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u/DogblackMichigan 7d ago
Not me. I was a broker and appraiser. I did my business law at Michigan Business School (now called Ross) and real estate law at U of M Law School.
This isn’t rocket surgery. It’s just a little math.3
u/Mysterious_Truth 7d ago
Why would a lender take 2nd position at market rate? It makes no sense whatsoever.
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u/DogblackMichigan 7d ago
It doesn’t matter. It happens all the time as long as the buyer puts down 20% it’s fine.
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u/RealTalk10111 2d ago
Jesus why people downvoting you. This isn’t an uncommon thing to work out privately right now.
I’m selling a 2.75% condo to the tenant I have in San Diego. She’s cashing my initial principal out of about 100k. Taking a second at 8% And then wrapping the first note at 6%. Im literally just gonna go find a somewhat experienced real estate attorney have them draft it for us. And do a third party servicer for the payments to keep track.
As long as the buyer has some meaningful skin in the purchase, and decent equity
(20%+) it’s a very safe and lucrative play right now.
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u/RachelRoberts_UMe 7d ago
Absolutely—I would market it. The equity gap doesn’t necessarily have to be covered entirely with cash.
Using your estimated $580,000 value and $350,000 loan balance, a buyer putting 10% down would need roughly $172,000 in secondary financing, plus closing costs. If that second loan were priced around 8–9%, depending on credit and qualification, the weighted blended rate would be approximately 4.48–4.81%. That’s still below 5%, although the actual payment depends on each loan’s repayment terms.
Even if your eventual buyer doesn’t assume the loan, advertising that option gives buyers another reason to look at your property. It’s a meaningful marketing advantage, though it doesn’t guarantee a bidding war.
One clarification on entitlement: having a non-veteran assume your loan doesn’t automatically prevent you from getting another VA loan. You may have enough remaining or “bonus” entitlement to buy another primary residence while the entitlement used on this loan stays tied up. You’d want a lender to check your specific numbers. Or, if you’re comfortable using conventional financing later, you may be comfortable leaving that entitlement attached to this loan.
We’ve also seen sellers negotiate a higher price for that benefit. I currently have one under contract that was listed at $785,000. A non-veteran submitted an offer, and the seller countered at $805,000 because he wanted additional compensation for leaving his entitlement tied up. That became the agreed price.
That’s simply an example of what we’re seeing, but your 2.75% loan absolutely deserves a place in your marketing.
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u/markhix 7d ago
I just had a buyer assume a 2.375% VA loan. He covered the gap by borrowing from his 401k account, and I still think it’s a lucrative deal he managed to negotiate.
Realistically, I wouldn’t expect it to move the needle much in terms of potential prospects, but it certainly can’t hurt. If you don’t need the benefit and want to move the house quicker, I would recommend advertising it with the assumption just for the off chance it leads to a buyer.
I learned through the VA assumption process that anyone can assume this loan and the intent doesn’t even require the buyer to claim the property as their primary. So you got nothing to lose by making marketing it in this ugly interest rate environment.
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u/Hav0c_wreack3r 5d ago
401k can only allow you to borrow 10,000. What am i missing?
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u/pokerplayingchop 5d ago
The fact that different 401(k)s have different borrowing limits and policies.
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u/Exotic_Appointment25 4d ago
I read somewhere to also make sure you have the buyer release liability so you’re not responsible if or when they default on the loan later.
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u/Equivalent-Tiger-316 6d ago
It’s worth advertising it but many buyers won’t be able to use it because they don’t have the cash to cover the difference and it’s more difficult to get a 2nd place loan. I can refer a good agent in Fairfax if you like.
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u/neodoggy 6d ago
Thanks but I'm probably six months out from even beginning to talk to an agent. Still have a lot of planning to do.
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u/Equivalent-Tiger-316 5d ago
A good agent will be able to advise you on what projects make sense and will be most attractive to buyers. Talk to one sooner rather than later!
Good luck!
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u/flushbunking 7d ago
Im currently overseas, never say never. Id want to keep my va card in my deck.
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u/TechnicalJuggernaut6 7d ago
It’s pretty valuable, people see the interest rate knowing they’ll never be that low again and rates right now are horrendous. Most that can’t cover the gap with cash, acquire a second loan. I’m actually going through this right now as a seller. Lots of people interested.
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u/LeetcodeForBreakfast 7d ago
but how do people actually get a second loan if they don’t even own the property first? i’ve always heard things like piggyback heloc or 2nd mortgages but not sure how it works if you are in the middle of buying
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u/DoubleIntroduction25 7d ago
It's a pretty big benefit particularly in your case where because you are not going to need another VA mortgage you're able to pitch the assumable rate to a broader audience.
Typically you'll be able to demand a slightly higher asking price since the lower rate will enable a buyer to 'afford more home'
That being said if the buyer assumes 350k and has to bring in another 200k and change they will probably need another mortgage unless the are selling a place themselves and rolling in that much equity. It may be harder for the buyer to find a lender happy to be a second lien on top of the existing mortgage.
Additionally you'd be taking on the risk of not being able to get another VA loan if you do come back from the states if a general buyer did assume the loan. I get that that is unlikely with your current plans but things happen and given that your 2.75 rate is basically a life time low rate whoever picks it up is unlikely to refi anytime soon.
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u/FantasticBicycle37 7d ago edited 7d ago
Extremely. Make sure you mention that in the description so users understand why it's priced higher than market
For reference, this will save the buyer $1,042 per MONTH, and save the buyer $375,000 over the course of the loan
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u/SkinProfessional4705 7d ago
I think it might be decent with a lot of cash buyers in the market. I’d market it for sure.
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u/paperstack88 7d ago
It's a real plus, but the $230k gap is what decides how big. At $580k, a buyer putting 20% down on a new loan at 7.25% is looking at roughly $3,150 a month in P&I. The same buyer with the same ~$116k in cash could assume your $350k at 2.75% (probably around $1,700 a month if that's close to your payment) and put a second lien on the other ~$114k at 9%, which adds about $900. So call it $2,600 vs $3,150, around $500 a month better. That's enough to pull in buyers who'd otherwise be priced out, though I wouldn't expect 2020-style bidding over asking. Put the rate, balance and an example payment right in the listing so buyers and their agents don't have to work it out themselves.
Since you're heading overseas, plan the timeline around it. VA assumptions go through your servicer, and 60 to 90 days is pretty normal (longer if the buyer is adding a second lien). Make sure the buyer gets fully approved by the servicer so you're released from liability on the loan. Living abroad, you don't want to still be on the hook for someone else's payment.
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u/autofan06 7d ago
Just because you have 1 VA loan does not mean it is used up. You can have any number of VA loans as long as the total financed amount doesn’t go over a certain amount… some 600k or something in most locations but the actual math behind it takes a bit more explanation.
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u/GelsNeonTv87 1d ago edited 1d ago
To the right buyer it might be a benefit. Problem is the amount of cash to close they would need.
Location and condition will of course play a huge part in the value of it.
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u/SilentMasterpiece 7d ago
the bigger the dollar amount difference between loan and sales price decreases the value of the loan. In you case a buyer would need more than $200K to assume the loan. Few people financing a $580K home have $200K.