While VA loans are usually the best fit for veterans, there are still those families who default on their mortgages. When homes purchased with a VA loan enter foreclosure, the VA can buy the property back from the lender and put the house back on the market, usually at a much lower price than before.
VA-owned properties can be residential or commercial, and are sometimes referred to as repo homes, as in “repossessed.” After a borrower defaults on his or her mortgage, the VA acquires the property and must repay the original loan amount back to the lender. To make up for this payment, the VA sells the house again, this time to anyone, not just to those with VA entitlement. You can buy one of these properties with a vendee loan or vendee financing. This is a loan specifically used to purchase these VA-owned, foreclosed homes. However, you don’t have to use a vendee loan: you can also use VA, FHA, or conventional loans to buy the foreclosed house.
What Are VA Foreclosures & Who Can Buy Them?
Vendee loans are available to anyone, whether they are a veteran or a non-veteran. They’re lent out through the Ocwen Financial Corporation, a nationwide network of real-estate agents. Vendee loans are a good option for those looking for a relatively cheap mortgage.
To locate available VA foreclosed homes in your area, look through your multiple listing service or contact your local real-estate agency. You can also look at the Ocwen Financial Corporation’s website, search by state on Zillow, or subscribe to sites like RealtyTrac that specifically track foreclosed homes. The federal government also lists government-owned properties for sale on websites such as HomeSales.
How Do I Make an Offer on a VA Repo Home? Once you’ve identified a foreclosed home to buy, contact your local VA-approved listing agent who currently handles the property. They will be able to show you the house and help you go through any preliminary steps, like getting it appraised or inspected. Once you’re satisfied with your pick, have your real-estate or selling agent write up the purchase contract. You’ll have to provide all documentation required by the VA. Once your application is complete, your agent can submit it through the listing broker. Listing broker information can be found on Ocwen’s website.
Benefits of a VA Foreclosed Property
VA foreclosures usually sell for half their market price, come with little-to-no closing costs, and demand very reasonable down payments, sometimes as low as 0%, so long as the property is your primary residence. If you do have closing costs, these can be financed into the life of the loan. Additionally, VA foreclosed homes come with no required insurance premiums or prepayment penalties. As per VA rules, your credit score won’t play a huge role in the approval process, and you may also qualify for a very low interest rate. If you’re a veteran applying for a vendee loan, you can even receive the house at a subsidized rate.
If the VA foreclosed home isn’t going to be your primary residence, you can still purchase it with as little as 5 percent paid down. Vendee financing also includes the VA funding fee as part of the closing costs.
Keep in mind that, when buying a foreclosed home, the VA won’t repair any damages made by the previous owners. If you want the house, you’ll have to buy it “as-is.” However, it’s highly recommended that you get the house approved and inspected before purchase and that you factor in the costs of repairs before you close.
Low Rates for Our Loyal Veterans
VA foreclosed or repossessed homes can be excellent home-buying options for veterans and non-veterans alike. They’re cheap, backed by the VA, and come with little hassle for those who qualify. If you’re interested in purchasing a VA foreclosed home, or if you want to know more about VA loans in general, give us a call at 866-569-8272. Our loan officers will be happy to answer your questions and take you through your options as you start the path to home ownership. For more information, visit our website.