VA foreclosure properties

Homes, which appeared to be the VA foreclosure, are as a rule destined with mortgages of civilian veterans. To give the definition of VA foreclosure one has to find out, that the past buyer of the property was a US military Veteran, the branch is not important, and the mortgage is supported by Federal Government, which guaranteed the home 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 came into foreclosure. This is mean, that if loan ends with failure lender gets back all invested money, so that deal is very attractive for investors.

VA foreclosed properties appearance is not a rare situation, thousands of them happen each month in the USA. Everyone who wants to purchase a VA foreclosure has to pay so called Funding Fee, implemented by Federal Government. The Funding Fee is calculated as a determined per cent of mortgage value and it has a number of important tasks. 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 passes a range of strong features, such as:

  • - The flexibility of mortgages;
  • - These mortgages are free from insurance, so no MIP (mortgage insurance premium) has to be paid;
  • - All losses covered by Department of Veterans Affairs;
  • - No need in money down.

So VA foreclosures are attractive investment proposition which a lot of homebuyers and real estate investors prefers from all scope of foreclosed homes.

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 stop 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.