VA foreclosure

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Homes, which appeared to be the VA foreclosure, is connected with civilian veteran’s mortgages. To have an understanding of VA foreclosure one has to find out, that the past buyer of the home was a Veteran of United States military forces, the branch is not important, and the mortgage is supported by Federal Government, which gives the guarantee to the home loan.

This Guarantee, given by Department of Veterans Affairs (VA guarantee) provides the minimal risk of lender, as VA takes responsibility to cover all lender's losses in case the house came into foreclosure. It means, that if loan ends with failure lender returns all invested money, so this deal is profitable for investors.

VA foreclosed properties appearance is not a rare situation, thousands of them happen each month in the United States of America. 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 calculated as a determined per cent of loan value and it has several important purposes. For instance, it enables Veteran to buy an apartment 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 list of advantages, such as:

  • - Mortgages are flexible;
  • - These mortgages are free from insurance, so no MIP (mortgage insurance premium) has to be paid;
  • - Department of Veterans Affairs cover all closing expenses;
  • - You no longer afraid of money down.

So VA foreclosures are popular investment tool which a lot of homebuyers and real estate investors prefers from all scope of foreclosed houses.

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 avoid foreclosure, the home 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.