What are the potential disadvantages?

For sellers:

• The escrow balance stays with the loan and will not be refunded to the seller.

• With a VA loan, the original borrower's entitlement, meaning the portion of the balance the government guarantees it will repay if the borrower defaults, stays with the assumed mortgage after the sale for the life of the loan. For this reason, the seller might not have enough entitlement remaining to qualify for another VA loan to buy their next home. However, if the assuming buyer is a member of the military and eligible for a VA loan, he and/or she can substitute their entitlement for the seller's and the VA will restore the seller's entitlement in full.

For buyers:

• The buyer may be required to make a down payment, and since the loan amount cannot be increased, if the purchase price is greater than the existing loan balance, the buyer will need to bring the additional funds to closing.