The chance to snag a bargain can be a siren’s call that lures would-be homeowners to consider purchasing foreclosed properties. As MillionAcres notes, finding a foreclosure that suits your needs can be a smart way to get a home that’s larger or located in an area that you wouldn’t otherwise be able to afford. However, it often comes with hassles that don’t always play nice with all forms of financing. It can also mean buying a home in as-is condition. Can you buy a foreclosure with a VA loan?
Can You Buy a Foreclosure with a VA Loan?
The loans offered by the U.S Department of Veterans Affairs’ home loan program can provide 100-percent financing, low interest rates, relaxed qualifying, and other great advantages, so it’s no wonder that the people who are eligible for this housing benefit want to make the most of it. Can you buy a foreclosure with a VA loan? As FindMyWayHome.com makes clear, there’s nothing that explicitly forbids you from buying a foreclosure with a VA loan. However, there are some things that might make the process tricky. If you’re using a VA loan, you’ll need to pick your foreclosure carefully if you want a successful purchase.
Auction or Listing?
In life, timing is an important concern. Sometimes, it’s a matter of moving at the right speed for your needs. Other times, it’s a matter of getting things coordinated. As Military.com reports, the first stop for a foreclosed home is often the auction block. If that fails, then it makes its way into the real estate listings. For an eager homebuyer, the method can matter a great deal because buying at auction generally requires lots of cash within 48 hours. Since the ability to skip the down payment is one of the VA loan’s popular perks, it’s probably fair to say that a lot of buyers planning to use a VA loan don’t have the cash to buy a house at auction sitting around. While buying a foreclosed house at an auction with a VA loan probably won’t work, buying one via a real estate listing is possible. Foreclosures processed this way follow the normal schedule for home purchases, so the VA’s processing time for home loans is a better match.
VA Appraisers and Value Issues
VA loans will only be approved if the VA appraiser confirms that the property’s value exceeds its price tag. As MilitaryTimes points out, that can be a problem for buyers who are trying to close the deal on a foreclosure. VA appraisers use comparable nearby properties to assign a value for the property, and in areas where several properties have been foreclosed or been sold via short-sale, property values may be artificially low. If you feel your appraiser isn’t being realistic about the property’s value, gather some evidence. Then, make a Reconsideration of Value request.
As MilitaryByOwner notes, the VA sets firm property standards for health, safety, and structural integrity. While this approach is a fantastic way of protecting the health and interests of the service members it serves, it can make any attempt to purchase a home that is in need of significant repairs with a VA loan rather challenging. Unfortunately, there are many foreclosed homes that have been abandoned and empty for a prolonged period. These are unlikely to be move-in ready, and it’s doubtful that the bank or owner will be willing to pay for the repairs needed to bring them up to the VA’s minimum property requirements (MPRs). How can aspiring homebuyers get around this hurdle to find and buy the foreclosure that they’ve been searching for? The best strategy is to learn about the VA’s MPRs. Then, choose a property that’s in decent shape and likely to meet these standards. Stay away from homes that show signs of deferred maintenance, vindictive damage, or lack of care.
Can you buy a foreclosure with a VA loan? When you’re ready to reach for your housing goals, turn to the home loan pros at PrimeLending: Manhattan, Kansas, for assistance. Your needs are always our top priority. That’s why we offer friendly, personalized service paired with thorough, knowledgeable expertise as we guide you through every step of the home loan process. Contact us today.