You have certain basic rights as a VA loan borrower that you should

You have certain basic rights as a VA loan borrower that you should know about. These

include:

Assumable Loan. For all VA Loans committed on or after March 1, 1988, you may sell your

home to someone who agrees to assume your loan if the loan holder or VA approves the

creditworthiness of the purchaser(s). If the purchaser(s) is creditworthy and assumes the

liability to the lender and VA to the same extent that you did when you obtained the loan, you

will be released from liability on the loan. To obtain a release from liability, you should check

with the company to whom you make your payments before you sell your home. The loan may

becxome immediately due and payable if you do not obtain approval of the loan assumption

before selling your home. Keep in mind that you will not be able to get another VA loan with

the entitlement that you used for this loan until the property is sold and the loan is paid in full

unless the purchaser is a veteran and can qualify for substitution of entitlement. The local VA

office can provide you with details concerning substitution of entitlement.

No Prepayment Penalty. If you pay off your loan early, your lender cannot require that you pay

a prepayment penalty.

No Late Charge Unless Payment Is More Than 15 Days Overdue. Also, late charge may not

exceed 4 percent of payment amount.

These rights apply to you and, if you sell your home, to any buyer who assurmes your loan.

Some mortgage notes used by lenders may have provisions which seem to take away these

rights. However, the lender cannot enforce these provisions for a VA loan.

Your loan is guaranteed or insured under Title 38, United States Code. The law and regulations

that are in effect on the date your loan is closed govern the rights, duties and liabilities of you

and the lender. Any provision of any instrument executed in connection with your loan which is

inconsistent with the law or the regulations is invalid.

If your loan has been funded by a State or local housing program, these basic rights may not

apply to you. If you are a participant in this type of program you should receive a notice stating

the restrictions that apply to your loan.

If you believe your rights as a VA loan borrower are being violated by the lender, or if you have

any questions about your loan which the lender cannot answer to your satisfaction, please

contact the local VA office for assistance.

DEPARTMENT OF VETERANS AFFAIRS

VA FORM

DEC 1998

26-8978

RIGHTS OF VA LOAN BORROWERS

(IMPORTANT NOTICE)