Certified Residential Appraiser Practice Exam

What is a defining feature of VA loans?

1. Not assumable by others.

2. Guaranteed by the government and can be assumable.

3. Require private mortgage insurance.

4. Only available for investment properties.

The correct answer is: Guaranteed by the government and can be assumable.

A defining feature of VA loans is that they are guaranteed by the government, which significantly enhances the borrower's ability to access favorable loan terms. The government backing allows lenders to offer loans with no down payment and competitive interest rates, making homeownership more attainable for veterans and active-duty service members. Furthermore, VA loans are assumable, meaning that a qualified buyer can take over the mortgage under the existing terms. This can be particularly advantageous in a rising interest rate environment, since the new borrower can benefit from the lower rates of the original loan. This feature can add significant value to the property and make it more attractive to potential buyers. The other options present characteristics that do not align with VA loan specifics. Given that VA loans do not require private mortgage insurance (PMI), they are distinct in that regard. They are generally intended for primary residences rather than strictly for investment properties, which further differentiates them in the home financing landscape. Thus, the unique combination of government guarantee and assumability contributes to making VA loans a defining feature in the realm of mortgage options for eligible borrowers.