VA foreclosures

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Real estate, 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 United States military Veteran, the branch is not important, and the mortgage would be impossible without support of Federal Government, which gives the guarantee to 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 financial losses of a lender in case the house is foreclosed on. It means, that in case of failure lender gets back 100 per cent of invested money, so this deal is profitable for investors.

VA foreclosed properties appear quite often, thousands of them happen each month in the US. Everyone who wants to purchase a VA foreclosure has to pay an obligatory Funding Fee, charged by Federal Government to protect itself from high risks. The Funding Fee is a certain per cent of mortgage and it has a few 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:

  • - The flexibility of mortgages;
  • - There is no need in any mortgage insuranse, 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 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 of foreclosure avoiding, 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.

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