Buying a VA Foreclosure Home
VA foreclosures – or “Veterans Affairs foreclosures” – describe
homes that the last buyer purchased with a VA home loan. VA home
loans are available to veterans of the United States military, and
these mortgages are actually supplied by private lenders like banks,
and guaranteed by the VA. When any person or organization guarantees
a loan, upon the borrower’s default the guarantor is called to pay
the loan – so when a borrower defaults on a VA-guaranteed loan, the
VA pays the mortgage lender and repossesses the home. The VA then
sells the home, hoping to be reimbursed for the mortgage.
You don’t need to be a veteran to purchase VA foreclosure property,
or to have the VA finance your mortgage for these foreclosure homes.
There are two offers you can make on a VA foreclosure home: a cash
offer, or a term offer. When you write a cash offer, a third-party
mortgage lender will finance you, and this can be beneficial – since
the VA isn’t financing your purchase, they may be more willing to
negotiate the price and closing costs. A term offer means the VA
will finance your mortgage, and usually ask for low-money-down. And
whether you write a term or cash offer, when you buy a VA
foreclosure property (with a max value of $359,650, or $691,600 for
multi-family properties) the AmeriDream may cover your down payment
and closing costs.
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