Guide to VA Loans

Loan Repayment Terms

The maximum VA home loan term is 30 years and 32 days; however, the term ay never be for more than the remaining economic life of the property as determined by the appraisal.

VA Loan Questions and Answers

1. May a veteran pay off a VA loan before it becomes due?

Yes. A VA loan may be partially or fully paid at any time without penalty. Partial payments may not be less than I monthly installment or $100, whichever is less. (Consult your lender.)

2. May the maturity on a VA loan be extended to reduce the monthly payments?

Yes, provided the veteran and the lender want to extend it and the extension provides for complete repayment of the loan within the maximum period permitted for loans of its type.

3. If a veteran dies before the loan is paid off, will the VA guaranty pay off the balance of the loan?

No. The surviving spouse or other coborrower must continue to make the payments. If there is no coborrower, the loan becomes the obligation of the veteran's estate. Protection against this may be obtained through mortgage life insurance, which must be purchased from private insurance sources.

4. Will the veteran's payments always be paid to the same company?

No. It is common practice in the mortgage lending industry to sell mortgages, often before the first payment is even due. If your loan is sold, you may find that you sent your first payment to the wrong place and the new holder of your loan may send you an overdue notice. Even though you know you made the payment, and is is up to the two lenders to get it straightened out, do not ignore the notice. (Most lenders will notify the veteran if the loan is sold and help straighten out any problems.)

5. Does having a VA loan limit a veteran's right or ability to sell the property?

No. A veteran may sell the property to a veteran or non veteran at any time. However, if the loan was closed after March 1,1988, and it will be assumed, the qualifications of the assumer must be reviewed and approved by the lender or VA.

6. When a veteran sells the property to someone who will assume the existing VA loan, is the veteran released automatically from personal liability for repayment of the loan?

No. If the loan was closed after March 1, 1988, the lender or VA must be notified and requested to approve the assumer and grant the veteran release from liability. If the loan was closed prior to March 1, 1988, the loan may be assumed without approval from VA or the lender. However, the veteran is strongly urged to request a release of liability from VA.

7. If a loan closed prior to March 1,1988 can be assumed without VA's approvals why should a veteran be concerned about requesting and obtaining a release from personal liability?

If a veteran does not obtain a release of liability, and VA suffers a loss on account of a default by the assumer or some future assumer, a debt may be established against the veteran. Also, strenuous collection efforts will be made against the veteran if a debt is established.

8. How may a veteran obtain a release of liability from VA?

By having the buyer assume all of the veteran's liabilities on the VA loan, and by having VA or the loan holder approve the buyer and the assumption agreement. (If the VA loan closed prior to March 1,1988, the application forms for a release of liability must be requested from the VA office that guaranteed the loan. If the VA loan closed on or after March 1,1988, then the application forms must be requested from the lender to whom the payments are made.)