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When a veteran obtains a VA loan and is being transferred, they have the option to allow a non-veteran to assume the loan. This is a beneficial feature of VA loans, which can provide flexibility for service members who may need to relocate due to military orders.

The process allows the non-veteran borrower to take over the existing VA loan with the terms already in place, which could be advantageous for them as the loan might come with a lower interest rate compared to current market rates. By enabling loan assumption, the veteran can avoid selling the house outright or needing to refinance, which may come with fees and other complications. This option can be particularly useful in maintaining affordable housing options for buyers if the housing market conditions are not favorable for a sale.

The other options may involve more complex financial implications or don't leverage the benefits of the VA loan effectively. While selling the home at a loss or retaining it as a rental property may be viable solutions, allowing the loan assumption directly addresses the need for a seamless transition for the veteran. Additionally, refinancing the loan, while possible, might not be the most immediate or cost-effective route when a straightforward loan assumption is available.