Parents who served in the military have the opportunity to use their service to help their children obtain a new home. They can do this buy using their option for VA home loans. These can be a less expensive way to buy a home and provide your child with the financial help they need.
What Are VA Home Loans?
VA home loans are provided by private lenders to people who served in the military. They are not typically provided by the government but by different lenders. They usually include more reasonable interest levels and help veterans who are struggling find the home that they need to be happier and safer and free from homelessness.
These types of loans are not usually available for the veteran's adult children. However, that doesn't mean that parents can't take out a loan for a struggling child and use it to buy a house for them. There are many advantages to this approach, particularly when it comes to paying back the loan after transferring it to the child.
Payments Can Be Reasonable
One of the best things about VA home loans is that they are usually affordable. For example, a $150,000 home purchased with a VA loan at 3.99 percent interest on a 30-year payment schedule would cost just $924 per months. For an adult child who is trying to get back on their feet after a job failure or who has a somewhat limited income, this should be fairly affordable.
It is possible to set up a system where the child can pay the parent the money they need every month. Then the parent who took out the VA loan could use that cash to pay the mortgage. However, it is often a good idea to consider transferring the loan amount to the child. This transfer cuts out the middle man and streamlines the process.
It Is Possible To Transfer The Loan
Those who use a VA home loan to help their children buy a house can actually transfer the loan amount to the child buyer. This position has changed slightly over the years. For example, it was once possible for all VA loans to be transferred to civilians. Now, it is required to go through a loan assumption approval process that requires talking to the lender.
This situation typically involves assessing why the loan is being transferred and gauging whether the new buyers can afford it. In this situation, a father or mother transferring a VA home loan to their children may be a little complex. The children must be able to show that their income is large enough to take over the payment.
Thankfully, this position is often just a formality. Few VA home lenders will balk at providing someone with transfer approval. However, it is necessary to talk to your loan officer first. They can help you understand whether or not your child can assume your loan and own their own home. Contact a lender, like GRT VA LOAN, for more help.