E075: Understanding VA Entitlements: Demystifying Assumable Mortgages for Veterans

Nicole Saunches: 00:00:32

Hello and welcome back to Selling St. Pete's I'm Nicole Saunches, and this is the show where we pull back the curtain on real estate decisions nobody explains clearly enough. Today's conversation is a continuation of something we started with my guest.

We've been digging into assumable mortgages, and today we're narrowing in on a piece that trips up veterans, realtors and loan officers alike. VA entitlements. Here is the thing. Entitlement isn't a loan amount. It's not a credit line.

It's not money sitting in account waiting for a veteran to spend. And because almost nobody explains it that way, veterans walk away thinking they've used up a benefit they actually still have.

Joining me again is Nora Simpson from AssumeList. She works with buyers and sellers navigating loan assumptions every day, which means she sees entitlement questions from every angle.

The veteran selling, the veteran buying again, and the civilian buyer trying to step into someone else's low rate. Nora, welcome back.

Nora Simpson: 00:01:52

Hi, Nicole. So good to be here.

Nicole Saunches: 00:01:54

Great to have you again. So let's start at the beginning because I think most people, even in our industry get this wrong. Can you explain entitlement in plain terms?

Nora Simpson: 00:02:09

Sure.

Okay, so every person serving in the military for a fairly small minimum amount of time, and every person who has retired or been honorably discharged from the military who served a fairly small reasonable amount of time. And same for folks in the reserves. I believe for the reserves, you have to have been in the reserves for six years.

But anytime you serve in wartime or any of that, or active duty, it's a lot easier to get your entitlement.

So once you've hit that, "okay, I qualify for VA entitlement now", you have a kind of an ability to take out a loan where the Veterans Affairs Administration guarantees 25% of the amount of that loan. Also, that loan is a primary mortgage that has no PMI or no mortgage insurance.

And that loan is generally, if you're looking at different interest rates, you can usually get a slightly lower rate for the VA mortgage rates than for conventional, just slightly lower without buying it down. And you can also buy it down just the same way that you would a conventional loan.

So the ability to take out a primary mortgage on a new home with guarantees from the VA behind you, that's the essence of entitlement.

The other piece is that even though there are various funding fees and transaction fees and such, unless you are officially a disabled veteran, all of that can be rolled in to the loan. And in fact, people get pretty excited about the fact that you can get a VA loan where you put $0 down as a down payment.

So that, that's a very exciting thing for people.

Nicole Saunches: 00:03:53

Excellent. And what's the difference between full entitlement and partial entitlement?

Nora Simpson: 00:03:59

Okay, so if you've never used your VA loan, like if you've never actually purchased a home and gotten a VA loan on it, but you are someone who meets the requirements for VA entitlement, then you have your full VA entitlement.

Or if you have used your VA loan but you've sold the house that had the VA loan, or you've refinanced out of your VA benefit into a conventional loan at some point, because people did that a lot in the low rate years, then you have restored your full entitlement.

So either selling your house that had your VA loan on it and clearing out the loan, or if you have a VA mortgage on a home, refinancing out of that VA mortgage into some other loan product that is not VA related, either of those will restore full entitlement. And now you've got your full entitlement, assuming you don't have it tied up in any other properties.

Nicole Saunches: 00:04:58

And if a veteran has the full entitlement, is there really no cap on what they can borrow?

Nora Simpson: 00:05:05

Well, so if you have full entitlement and you haven't used part of your entitlement on a property, there is no cap on what you can borrow as long as you can qualify for the monthly payment.

So if you're a young fellow or young lady, two, three years into the military at a somewhat low level, and you're making good money, but not great money, even if you have $832,000 of entitlement, which is the sort of VA entitlement cap for 99% of counties in the United States, you might not qualify to take out a VA loan at $800,000 because that monthly payment might be more than half your salary per month. So you can actually only qualify for, no matter how much your entitlement is, you can only qualify for what you are credit worthy for.

And if you're somebody who has a lot of income, a four star general, etc. And you can afford a $15,000 a month mortgage, if you have your full entitlement, then you can take out a $3 million VA loan.

It's rare, but it does happen.

Nicole Saunches: 00:06:18

Excellent. And can a veteran own two homes financed with VA loans at the same time?

Nora Simpson: 00:06:25

Absolutely.

Nicole Saunches: 00:06:26

Can you walk us through how that actually works?

Nora Simpson: 00:06:28

Sure. Okay, so there's A couple of ways that can happen. Number one, I'm not a veteran. I've never served, but.

But I love knowing about VA entitlement and teaching people about it. So let's say I'm a veteran or I'm active duty military and let's say I buy a home for $300,000 in Florida and I.

Let's say I finance it 100% and there's a one and a half percent funding fee the first time I use my VA entitlement. Okay, cool. Say I'm not a disabled vet. Okay, so 300,000 plus the 1.5%.

of my VA entitlement, but in: 2026

But there's going to be a 3 1/2% funding fee the second time I use my VA entitlement.

So I can choose to pay that if I've got a little money now because it's like a few years later and maybe I've been saving, or I can still roll it in because three and a half percent of 400,000 is still going to be, the total is still going to be less than the 500,000 plus a little extra. So I can choose to roll that in. And now I own two properties with no money back.

Nicole Saunches: 00:07:50

When you buy that second home, does it have to be a primary residence?

Nora Simpson: 00:07:55

Yes. Every time we use VA entitlement, no matter how many times we use it, every time we use it, the second time, the third time, etc.

Whether you're using it after you've cleared out your entitlement from another place or you're maintaining ownership of that place and turning it into a rental property, every time you use VA entitlement, you have to live there for 12 months. Basically, if you purchase a home and say, I want to rent this thing out in six months, you can't do that unless you have military orders to move.

That is the one exception.

So if you're active duty and you've just bought your VA home and you're excited and then you have military orders or a bunch of things are happening and we have to order that you go to this military base in another state to help prepare for blah, blah, blah. If your orders change, that's the one example where you're allowed to vacate before your 12 months.

Of course, most people with VA entitlement are veterans, so that once you're out of the military, those order situations don't apply to you.

So if you're a vet and you're not thinking about the questions of military orders, then yes, you will always have to live there for 12 months before you can move to a new property. Use your VA entitlement again. And then when you use it again, you will also have to live in the new property for 12 months.

Nicole Saunches: 00:09:11

u buy house one in, let's say: 2024

Nora Simpson: 00:09:27

Yes.

Nicole Saunches: 00:09:28

Okay.

Nora Simpson: 00:09:28

It can be anything. It can be a rental.

Nicole Saunches: 00:09:30

Rental, Yep.

Nora Simpson: 00:09:33

If you want more of your entitlement available for your next home, you can refinance out of the VA piece of your mortgage on the first location. You can just refinance right out of it into a conventional. It's not that hard to do.

thing to do because rates in: 2026

But if for some reason you're not worried about having to pay a little extra on that mortgage and you're happy to turn it into a second home or a rental property, that's going to work for you and you really want to have your full VA entitlement available for the next home that you're about to buy, then that's certainly an option for having your maximum VA entitlement available.

Nicole Saunches: 00:10:18

But then back to the beginning, you talked about the benefit of the VA mortgage that conventional doesn't have is there's no PMI. Well, conventional doesn't if your equity is more than 20%.

Nora Simpson: 00:10:32

That's exactly right. If your equity is more than 20% when you refi, then you might not have PMI. Then maybe life is good in that way. Right. That's one disadvantage for FHA.

Even though FHA can be a wonderful useful path for homeownership. And FHA assumptions can be fabulous for people who are looking to purchase homes, but not rental properties with low rate mortgages.

chased with an FHA loan after: 2011

Nicole Saunches: 00:11:06

Yeah. And is there a case where a veteran should restore entitlement and one where maybe they shouldn't rush into it.

Nora Simpson: 00:11:16

Sure. So let's talk about not rushing into changing your relationship to an existing mortgage. Right?

in: 2021

So you might want access to your full VA entitlement because you want, you want to buy a three million dollar home in New York City with a VA loan, right? Or in Fairfax, Virginia.

So for that, if you want that 3 million dollar home, you're definitely going to need your full VA entitlement right now in Virginia and New York. Just so you know, the VA entitlement is a little higher than it is in Florida or Texas and a little higher than in 99% of the counties.

In 99% of the counties, it's 832,000 in New York City, in Fairfax, Virginia, in Los Angeles and the D.C. area, the VA entitlement limit for this year is 1.249 million. So it's a little higher. So if you only have 300,000 tied up in your Florida home, you might consider just taking that VA entitlement.

1.249 Minus 300 is like 949, right? So you take your 949,000 and you go to New York or you go to Fairfax, Virginia, you can still get a pretty nice place.

And you might even consider assuming a place, in which case there would be a lower entitlement tied to that property, but you'd also have a cash gap, which we'll talk about subsequently.

So if for some reason you feel comfortable self guaranteeing the differential between the amount you have in entitlement and the amount of the purchase price, and when you self guarantee you only have to self guarantee 25% of that differential, then there's a reasonable case to be made for leaving the VA entitlement intact in that $300,000 home, especially if you have a really low interest rate.

If you want to take out a no money down VA loan for $3 million and it's your second time using your entitlement, then you probably either want to refi or sell, depending on what your financial situation looks like.

Nicole Saunches: 00:13:34

And we talked about in our episode together on mortgage assumption 101 that the reason why someone may want to sell their assumable loan or let another person assume the loan is because they have such a low interest rate that that can drive a stronger purchase price because people are looking to take advantage of the low interest rates that the previous owner. Absolutely.

Nora Simpson: 00:14:03

It can drive a stronger purchase price. It can drive more buyer excitement. It can drive more buyers to be interested. Right.

There's a lot of reasons that sellers offering a VA assumption with a purchase, especially of a low rate, a mortgage, there's a lot of reasons why that's usually a benefit to their selling process.

Nicole Saunches: 00:14:24

Excellent. And let's talk about the myth that only veterans can assume a VA loan. Can you set the record straight?

Nora Simpson: 00:14:33

So anyone can assume a VA loan if the veteran owner is willing to allow the portion of their entitlement that is tied to that property to remain with the property. It is never their whole entitlement unless they bought a 5 million or $3 million VA home.

You know, I mean, it's just, it's so rare that people do that, but once in a while it happens.

Most of the time, the amount of entitlement tied to the property is going to be less than the amount of entitlement that is available at today's entitlement numbers, because entitlement goes up every year.

if they purchase that home in: 2021

Nicole Saunches: 00:15:35

And how will a veteran know how much entitlement they have remaining?

Nora Simpson: 00:15:41

That is pretty easy. You just find out what the county is where you're doing your next purchase.

You can look up the county loan limits, the VA loan limits for the county where you're doing your next purchase. Right. And then you subtract the amount, the initial loan amount on the loan.

ke let's say you bought it in: 2020

in: 2021

atever the loan amount was in: 2021

So it's either what you took out when you purchased, and sometimes that's more than the purchase price because people will roll certain fees into the loan, or it'll be what you refi'd for. But either way it's one of those two numbers. It's never the remaining balance on the loan. That's a misconception.

Nicole Saunches: 00:16:55

Okay, and what does AssumeList actually do differently than a buyer just finding an assumable mortgage on their own through their real estate agent or lender?

Nora Simpson: 00:17:09

Well, hopefully they're asking their real estate agent. You do have a subscription to AssumeList, right? And you can help me get a buyer sub account for free. Right.

So once they are on AssumeList, hopefully their agent can help them find lots of different assumable homes on AssumeList. If you don't have access to AssumeList, it is very difficult to locate listings that have VA or FHA mortgages with low rates.

Only 5 to 10% of mortgages that are assumable and desirable are advertised as assumable in the listing world. Like if you go to of these big websites like Zillow or Redfin, you're only going to find 5 to 10% of the homes that you.

If you just type in the word assumable or assumption or VA or FHA, you're only going to find 5 to 10% of the homes you would find if you were to search on AssumeList in that same area. So first I would start with searching. Secondly, there's so many misconceptions.

Even the veterans who are selling their homes with the assumability know how flexible their entitlement is. They often think their entitlement is equal to the remaining balance on their mortgage instead of the initial loan amount or the refi amount.

They often don't understand all of the different parts and pieces and boxes that have to be checked properly for an assumption to work. There's just an enormous amount of education that has to happen. We do a lot of that education. We work with agents all over the country.

Even though we only cover 55 metro areas across 26 states, we actually work with agents across all 50 states to educate them and help them understand how assumptions work. Often, if you are an independent buyer and you want to do an assumption.

If your buyer's agent is afraid of assumptions and has heard all the horror stories and doesn't have any other sources of good information, you may not be able to find a buyer's agent who's willing to help you.

In fact, we've had calls, Nicole, from people who've said, I have talked to 15 agents in my area and not one of them is willing to represent me in approaching sellers about doing this assumption. Do you know anyone?

Nicole Saunches: 00:19:21

And it's really disappointing. You know, as an agent, I can understand why so few mortgages that are assumable are advertised that way.

Because prior to the rates increasing over the historically low rates that we saw, I really never asked a seller what kind of mortgage they purchased their home with. And when I did the assumption a couple of years ago, where I was the listing agent, I sold those sellers the home with the VA mortgage.

So I knew it was assumable.

And as rates had increased so substantially, I thought maybe this is a good way for them to sell because the market had slowed down, prices weren't increasing,.

Nora Simpson: 00:20:16

And you were very creative, open minded and resourceful and that, I mean, honestly, Nicole, a lot of agents I think do see the immediate appeal, but where are they going to go to get good information? Most agents do not think of themselves as experts in financing.

Nicole Saunches: 00:20:34

Yeah, right.

Nora Simpson: 00:20:35

What do they think of themselves as?

They think of themselves as experts in all of the contract rules and all of the regulations around home ownership and transfer of deed and title and da, da, da, da, da. But they have a friend they call on financing. They're not the financers. Right.

So when they call those lenders, their lenders say, oh, you don't want to do that. Oh, yeah, no, it's a mess. Oh, it's a horror show. Oh, don't even go near it. And they go, okay.

I guess my friend who knows more than I knew about this says it's a horror show. And honestly, without AssumeList, it would be a horror show.

I mean, we really help with that whole process and it takes an extraordinary amount of effort on our part, which is why our transaction management team works so hard and does charge a fee for people to help. But we are here for you and we're combat ready.

Nicole Saunches: 00:21:25

Yeah, well, and the fee that you charge.

Charge is largely offset by the savings that the person who's buying the home is getting because they're not having a loan origination fee, they're not having an appraisal fee. And you look at just those two numbers alone and it's easily on par with the fee that you charge.

And I have seen, like I said, the assumable mortgage that I transacted took four months and you guys in half the time.

Nora Simpson: 00:22:01

Yeah, we do it, we generally do it in no more than 60 days. But you are lucky. I mean, that's. Those are always the agents that said, oh yeah, it wasn't that bad, it was only four months. That's unique.

Usually I hear people say it was six months, it was eight months. It was a nightmare. It was 12 months and I think I've even shared this with you.

On the last podcast, there was one person who told me a story of it taking 12 months, partly because the buyers were up to some funny business. So they weren't fast to return paperwork and things like that. Not that being faster. Return paperwork is the thing that hacks the system.

The system is designed to make you want to give up. Right.

And so when they finally got everything submitted properly and went through all of the rigmarole and the bank dragged its feet happily for 12 months, it was a 12 month process. And at the end the buyers got a turndown that they had negotiated a pre occupancy settlement. So now they were illegal squatters.

Nicole Saunches: 00:23:05

Yeah.

Nora Simpson: 00:23:05

And it was a true nightmare for everyone involved.

Nicole Saunches: 00:23:09

I can imagine. Goodness. So we'll get on to happier news. With so many homeowners sitting on 2 and 3% rates, why do you think assumptions haven't caught on faster?

Nora Simpson: 00:23:28

Well, banks really don't like them and there are thousands of blog posts on the Internet, some of which are paid for by banks, others of which are just people copying what other people have said. But if there's any money behind the blog post, it's probably coming from a bank describing the assumption.

Once in a while you'll have an assumability advocate like me writing, yes, and you and a few others.

But for the most part, there are huge numbers of incorrect articles that are written so that when people are googling or chatting with ChatGPT, Google and ChatGPT can only give you what they find they're not actively researching and going, you know, let me call the expert, let me call Nora Simpson, head of education, like she might know something. I don't get a call from the LLM of Chat GPT. We're trying to put that stuff out there so the Chat GPT will know.

But I cannot tell you how often we are working with a buyer, a seller, an agent, all of the above. And I get a call and they say, I asked Chat GPT this. And I say, well, okay.

I mean, there's a part of me that wishes you wouldn't ask Chat GPT these things, just ask me. But okay, yeah, no, CHAT GPT is wrong about that.

they're, if they've scrubbed: 3000

They want to get rid of them. They see them as completely zero profit, low revenue, they hate them.

So they're doing everything legal and even a few illegal things to make sure that people are misinformed.

Nicole Saunches: 00:25:08

Which is unfortunate, because if you calculate the amortization on 2.5% of an $800,000 mortgage, we all know it's not 2 1/2% that the bank is getting. They're getting a substantial amount in interest because of how mortgages are amortized. So I don't feel incredibly sorry for the banks.

I do hope, though, that mortgage assumptions will catch on more because they can be an incredible savings for people, especially for our military veterans who have so valiantly served our country and really deserve the savings. Do you think assumptions genuinely can move the needle on affordability?

Nora Simpson: 00:26:00

sly. It's not what it was. In: 2024

You know, because cash gaps have grown. And of course, we've talked about this before.

But for all of you who are learning about assumptions, for the first time, the difference between the purchase price and the remaining balance on the mortgage is just growing every month because only mortgages in good standing can be assumed. So as mortgages get paid every month, you have to figure out another way to come up with that cash.

And of course, prices do go up over time, even when they're soft. Because interest rates feel high, Prices generally go up over time.

s still more than you paid in: 2021

So I think you had our preferred lender, Ryan Nelson, as a guest recently, and Mike Lorino and I. Mike Lorino is our super genius CEO who I love so much, and he and I went searching across the world for a fabulous lender who would be very knowledgeable but also open to learning. Right? And Ryan was that prince that we found, but we kissed a lot of frogs on the way. And so we're very happy with our prince, Ryan now.

But what Ryan is able to offer is a second mortgage, generally with rates in the sevens, if there are certain credit requirements and certain basic minimums met and that kind of thing. Most lenders don't even know how to offer a second mortgage that's available on an assumption, much less one that's got rates in the sevens.

. This is July: 2026

Right now, there's a summer sale going on.

If you take out $200,000 at least, and if you are putting down 20% cash of the purchase price, and if you have a credit rating above, da da da da da, you can get a 6 and a half percent rate for a little while. So they go through ups and downs. So we love being able to extend any kind of savings, any kind of assistance to people.

So that assumptions save more money these days.

Given that we have a mortgage calculator on every property so that you can calculate if I put down 10%, usually we recommend putting down at least a 10% down payment for an assumption because that gets you access to those rates in the sevens at the very least. So generally, if you put down 10%, assumptions are still saving people $500 a month, $1,000 a month, depending on the price.

If it's a $300,000 home and it's a $150,000 remaining balance and they put down 30K, it's probably going to save them 150 to $250 a month. Right. If it's a $900,000 home and there's $600,000 left mortgage, that's going to save them $800 a month.

So a lot of it has to do with just raw numbers and how interest rates work with raw numbers and all of that.

Nicole Saunches: 00:29:10

And AssumeList has a calculator on its site where people can hammer out some of those numbers. Correct.

Nora Simpson: 00:29:20

We have a mortgage calculator on every property and we have a VA entitlement calculator. Since this is our VA entitlement themed podcast, we have a VA entitlement calculator on every VA property.

Nicole Saunches: 00:29:33

Awesome. If an assumption isn't handled correctly, can the original veteran stay on the hook?

Nora Simpson: 00:29:43

Technically, if you're doing the federally guaranteed, legally regulated process of an assumption, where you're in contact with the assumption team for the servicer for the existing mortgage and you get an approval and a clear to close from that assumption team, then there is no more liability.

Once you get that clear to close, and then you go ahead and go through the process of closing and settlement, if for some reason any of that gets messed up, things can go wrong. I mean, and that's true in a regular purchase too. Right.

If contract documents aren't properly filled out, if there are things that go wrong when people don't do things the right way.

Nicole Saunches: 00:30:20

Correct. And that is the difference between a mortgage assumption and subject to, to your point?

Nora Simpson: 00:30:28

Well, sure. And subject tos are generally kind of an improvisational practice. There's no one way to do them. Some people will say you draw up a private contract.

Other people will say you draw up a private contract and you put a lien on the property. There's all these different things and it's not a black and white process, it's very gray. And there's just risk for all involved.

Because now the people who are assuming without doing an assumption, were moving into the property and paying the mortgage on behalf of the owner, they don't really have rights to the property.

And if for some reason the people living in the property paying the mortgage on behalf of the owner, if they stop paying, then the owner is on the hook. So it's just higher risk for all involved. An assumption is squeaky clean. Like an actual properly executed assumption is squeaky clean.

The buyer now owns this property outright. Full title, full everything. All liability of mortgage belongs to them, all liability in the property belongs to them.

And the seller is completely scot free. No more liability, nothing. It's like they never owned it.

Nicole Saunches: 00:31:32

Period.

Nora Simpson: 00:31:33

Full stop.

Nicole Saunches: 00:31:34

Okay, so we did this in the our last episode. I want to give a statement and you tell me if it's true or false and give a one sentence reason why I love it.

Nora Simpson: 00:31:50

Okay, I'm in.

Nicole Saunches: 00:31:51

Here we go. Statement number one. You only get one VA loan.

Nora Simpson: 00:31:58

Nope, nope, nope. You can take out as many VA loans as you want. You just have to have $1 left of entitlement and you can self guarantee 25% of the difference.

You can also refinance out of an existing VA property and then recapture entitlement. You can also sell a property you own with a VA mortgage, clear out the mortgage and recapture entitlement and go buy another home.

There are very savvy veterans who have bought 10 or 20 properties with their VA entitlement over time, of course, because you have to live in each one for a year and they've been savvy about refinancing, renting out, selling house, hacking, you name it. So there are many, many, many ways to use your entitlement again and again.

Nicole Saunches: 00:32:43

Your entitlement number is your borrowing limit.

Nora Simpson: 00:32:49

False, false, false, false. Your entitlement number is the number, whatever you have left if it's full entitlement.

Your actual borrowing limit is based on how much you can afford to take out as a loan. So you might have an entitlement limit of 800,000, but.

But if you can only afford to be approved for a $300,000 loan, then it doesn't matter that you have an $800,000 limit.

Conversely, if you have an entitlement limit of 200,000 because you've tied up your entitlement in other places, but you want to take out a $1 million VA loan, you absolutely can. You just have to self guarantee the difference between 1 million and 200,000 and you'll still get a VA loan with all the benefits of VA loans.

So self guaranteeing the difference between a million and 200,000 is actually not that hard. A million minus 200,000 is 800,000.

Self guaranteeing 25% of 800,000 means you put down a cash down payment of $200,000 on that million dollar property and now you've got yourself a VA loan.

Nicole Saunches: 00:33:50

Excellent. VA loans always take longer to close than conventional.

Nora Simpson: 00:33:58

No, I don't think that's accurate at all. I've watched Ryan.

I'm not a lender, so I've never had to do the paperwork, but I've watched Ryan do brand new VA loans for people because sometimes they come to us looking for help with assumptions and then they end up doing a traditional brand new VA loan and he usually gets them approved within a week and a half or something. It's really fast.

Nicole Saunches: 00:34:22

And I will state this again just because I don't think it can be stated enough times. Only veterans can assume a VA loan.

Nora Simpson: 00:34:32

No, no, no, no, no.

It's important that the veteran seller understand that if they allow a non veteran to assume the loan, whatever amount of entitlement has been tied to the property will now stay with the property. That's very important for the vet to understand.

If the vet does not understand that that's one of the things that causes a real estate agent to say it was a nightmare because they go, oh, they lost their whole VA entitlement. Well, how did that happen? I really need to know the whole story here.

The amount of the entitlement tied to the property is always equal to the amount of the initial loan amount or whatever it got refi'd. So it might have been that the veteran was convinced that they were only gonna lose the remaining balance and they were misinformed.

I can't always give you what quote really happened. When I hear these nightmare stories and people give me the half they wanna give me, they don't sit there and do a whole podcast on it, right?

So I don't always know, but I do know that there's only one way to part with VA entitlement. And that's you leave it behind. Leave the portion of it that's tied to that property behind as part of an assumption. Any veteran can choose to do it.

Which means that any home buyer and any investor who is credit worthy can assume that VA loan, period, full stop, on exactly the same terms that that VA loan is operating at when the veteran is occupying the property.

Nicole Saunches: 00:35:56

Excellent. And if every veteran only remembered one thing about entitlement listening to this episode, what should that one thing be?

Nora Simpson: 00:36:10

The fact that you can split your entitlement and that if you even have $1 left in your entitlement you can split still get a VA loan if you're willing to self guarantee 25% of the difference between the price and the remaining entitlement that you still have.

Nicole Saunches: 00:36:29

Excellent. And for realtors and loan officers listening, what's the one thing you wish they'd stop getting wrong?

Nora Simpson: 00:36:40

Oh my goodness. You've asked me a question that has 50 answers. Okay, this is a VA entitlement themed podcast, so I'm going to choose a VA entitlement thing.

The one thing I wish they would stop getting wrong is thinking that VA entitlement, that leaving behind VA entitlement leaves the veteran financially liable.

Almost every real estate agent I've educated, if I was talking to them one on one and they thought they knew what they were talking about, they said I would never advise my veteran to allow a non vet to assume the loan because I don't want them to be rendered financially liable. And I always say they are not financially liable. There is no liability, none. They leave behind entitlement.

Nothing bad can happen to them if the purchaser defaults on the loan or does something stupid with the property. Nothing. There is no liability ever again, Period. Full stop. So that is. That is one of the most common misconceptions.

Nicole Saunches: 00:37:45

Or that they would lose their entitlement, which they lose a portion but don't necessarily lose all of it. Or their capability of using a VA loan with a future.

Nora Simpson: 00:37:56

Well, you said one thing and I already used that for the vet. I was like, okay, I know.

Nicole Saunches: 00:38:00

I just know that I wanted to help my fellow realtors out and round out that answer because I know that,.

Nora Simpson: 00:38:07

I mean the portion thing is so important, right? The portion, the fact that entitlement can be split, the fact that they lose a portion.

But it is so likely, it is 99 of cases that they will retain some amount of VA entitlement. It's just so likely, it's so rare that you have someone who bought a Huge house for way more than the highest BA entitlement limit in the country.

It's just very unusual. So for most vets, they will retain some amount of their entitlement. Sometimes it's as low as $50,000.

But if they're gonna go buy a house for $450,000, guess what, they're gonna have to self guarantee a hundred thousand dollars at the purchase price and then they can have a VA loan.

e assumptions with rates from: 2020

So let's say they only have $50,000 left of entitlement. Let's say they have to leave behind $782,000 of entitlement from a beautiful large home.

St. Petersburg, Florida okay, the likelihood is they're walking away with 400 to 600,000 in equity, maybe 300,000 in equity.

But if they're walking away with 300,000 in equity and they want to buy a big beautiful house, or maybe they don't want to buy another big beautiful house, maybe they want to buy a small beautiful house. If they've got 50,000 left and they want a home for 850, they just have to self guarantee 25% of the difference. 850,000 Minus 50,000 is 800,000.

If they've walked away with a $300,000 net proceeds of equity, putting 200,000 of that into that $850,000 home and then getting that VA loan again is very workable. You know, it's a few extra steps. It's not as easy as 1, 2, 3, sign on the dotted line, here's the money.

It's a little more complicated, but it's doable.

Nicole Saunches: 00:40:24

Yeah. Well, Nora, this was genuinely one of those conversations where I think people are going to have to re listen to catch everything.

Entitlement is one of those topics that sounds simple until you actually need to use it correctly.

Nora Simpson: 00:40:44

It took me a lot of repetitions before I really grasped the whole thing. Took me a lot of repetitions.

Nicole Saunches: 00:40:49

Well, and it's taken me attending your daily Q and A a few times to grasp that as well. Which you open up to realtors, lenders and consumers alike.

Nora Simpson: 00:41:06

That's right. It's totally free. It's open to the public. Anyone can come. It's every day, five mornings a week at 11am Eastern, 8am Pacific.

We are so proud to come host you and teach you and realtors, buyers, sellers, investors and I haven't had the chance to plug this, so I'm just gonna say buyers and investors listening. I know you think you're smarter than all the realtors. It doesn't matter how smart you are. Without a realtor, you will not succeed at an assumption.

You absolutely need a realtor in order to succeed at an assumption and you need a realtor who knows what they're doing around assumptions. So come talk to me and I will educate you and maybe help you figure that out. And Nicole is also very educated and can help you figure that out.

Thank you.

Nicole Saunches: 00:41:48

And if you take one thing from today, your VA benefit is not a one time use coupon. It's reusable.

Nora Simpson: 00:41:57

Absolutely.

Nicole Saunches: 00:41:58

And how you manage it, restoring it, substituting it or leaving it in place, is a real strategic decision, not a formality.

So if you're a veteran thinking through a sale, thinking through a purchase or an assumption, go to Nora and the team at AssumeList or speak with me. If you are in the Tampa Bay area and we have you covered.

Nora Simpson: 00:42:25

We do homes. Assumelist.com learn is one of the ways to get to our Q and A.

Another way is to just go to assumelist.com assume a s s u m e l I s t dot com and there's a little box on that homepage right below the search part and it's got a picture of me when I was a little younger and it says want to ask a real person real questions and that's me. You click there, you register for our Q and A. That's one way to get in touch with us.

There's also different forms on the website you can fill out and one of us will get in touch with you.

Nicole Saunches: 00:42:58

And if you're a buyer or an investor and you want to see what mortgages are available for purchase, I am happy to give you a free sub account. So DM me and I will get you access.

Nora Simpson: 00:43:13

Free sub account. Free sub account from Nicole. So exciting.

Nicole Saunches: 00:43:19

So if this episode helped make something, click, please do me a favor and share it with someone who needs to hear it and hit the subscribe button so you don't miss the next one. Thanks for listening to Selling St. Pete. I'm Nicole Sanchez. I'll see you next time.