VA foreclosures

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Homes, which has a status of VA foreclosure, is connected with mortgages of civilian veterans. To give the definition of VA foreclosure one has to find out, that the past buyer of the home was a US military Veteran, the branch is not important, and the mortgage provided by Federal Government, which gives the guarantee to the mortgage loan.

This Guarantee, given by Department of Veterans Affairs (VA guarantee) minimizes the risk of lender, as VA takes responsibility to cover all lender’s financial losses in case the house is foreclosed on. It means, that in case of failure lender gets back 100 per cent of invested money, so that deal is surely profitable for investors.

VA foreclosed properties appear quite often, thousands of them occur monthly in the USA. If you want to purchase a VA foreclosure, then you has to pay so called Funding Fee, charged by Federal Government to protect itself from high risks. The Funding Fee is a certain per cent of mortgage value and it has a few important purposes. First of all, all money paid as Funding Fee, create a certain financial fund, which gives Veterans an opportunity to buy property with no money down. Buying a real estate listed as Veteran Administration foreclosure on, you get the all advantages mentioned, you can buy house without any money down and more over mortgage insurance is not needed.

Veteran Administration foreclosures gives a range of advantages, such as:

  • - Mortgage flexibility;
  • - Mortgage insurance is not needed, so there is no necessity to pay mortgage insurance premium or MIP;
  • - VA finance all mortgage closing expenses;
  • - You no longer afraid of money down.

So VA foreclosures are popular investment tool which many homebuyers and real estate investors prefers from all scope of foreclosure listings.

Post foreclosures (REO)

REO property or real estate owned property belongs to banks. How does it happen that banks own a real estate? Well, it is easy to understand: bank gives a loan, so mortgage appears, if client cant pay his dept and if there are no ways to prevent foreclosure, the house becomes the property of financial organization. It may seem that foreclosures can’t bring high profits as bank want to sell it offering the price which will at least cover the amount of the first loan. On the other hand, if you will be more attentive, you will see some ways to benefit greatly from buying a foreclosure house.

It may be the situation, when more then one loan is secured to the real estate; actually it happens quite often nowadays. In case second lender doesn’t make payments to the first lender and starts own foreclosure procedure, in this case the second lender is not part of foreclosure process any more. That is the main reason why plenty of second mortgages are valued around 20% less then the normal market price.

Bank doesn’t benefit from being an owner of a house; it needs money to flow constantly to get higher net profit. More over keeping a foreclosure as an asset may cause additional expenses. That is why bank wants to sell this burden as soon as possible, and it is likely to accept even not high price, just to cover the dept.