VA foreclosure

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Real estate, which has a status of VA foreclosure, are destined mortgages of civilian veterans. To have an understanding of VA foreclosure one has to find out, that the first buyer of the property was a Veteran of United States military forces, the branch is not important, and the mortgage would be impossible without support of Federal Government, which guaranteed 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 is foreclosed on. This is mean, that in case of failure lender returns 100% of investments, so that deal is profitable for investors.

VA foreclosed properties appearance is not a rare situation, thousands of them occur monthly in the United States. Everyone who wants to purchase a VA foreclosure 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 a few 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. On USHUD.com one can easily find a list of VA foreclosures, if one takes the decision to purchase a house, listed on this website, he automatically gets all the advantages, mentioned above. For instance, there is no need to pay mortgage insurance and money down is not requested.

Veteran Administration foreclosures passes a list of advantages, such as:

  • - Mortgages are flexible;
  • - Mortgage insurance is not needed, so no MIP (mortgage insurance premium) has to be paid;
  • - All losses covered by Department of Veterans Affairs;
  • - Purchasing mortgage with no money down.

So VA foreclosures are good investment choice which many homebuyers and real estate investors prefers from all scope of foreclosure properties.

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.