With the large number of foreclosed homes on the market these days, more prospective homeowners are looking in that direction to get the greatest bang for their mortgage buck.
Purchasing a foreclosure can be frustrating and time consuming, and doing it with a VA home loan brings additional challenges.
Sadly, some properties have been neglected as they work their way through the foreclosure process. And to qualify for a VA mortgage, a home must be move-in ready.
But it’s important to know what, exactly, that means.
The VA isn't keenly interested in cosmetic details like wallpaper or carpet. Its focus is more on issues that may present a health or safety hazard—like mold, decay or insect infestation—or those that affect one of the home’s major systems, like heating and cooling, plumbing and electrical.
VA appraisers rely on a series of Minimum Property Requirements that must be met. As a whole, they’re rooted in protecting the health of both your family and your finances. A dream home can turn into a nightmare if you discover that expensive, unexpected repairs are needed after you have signed the papers.
If problems do crop up during the purchase process, the VA requires that major repairs be made before the loan can be closed. The problem is that many banks prefer to sell their distressed properties as-is, meaning they won't pay for the repairs or even allow buyers to make them.
The right mortgage lender and real estate agent can help identify properties that may prove problematic for the VA appraisal process. And that can help ensure you don't waste time and money on inspections and an appraisal.
Choose an agent who is intimately familiar with the area, and a lender who understands VA loan requirements and is willing to work within them. Those key players can use that knowledge to direct you to foreclosed properties that are in better condition, and together they can guide you through the process more smoothly.
It’s also important to remember that patience will be at a premium when purchasing any foreclosed property, especially when using a VA loan. Many sellers prefer to take a cash offer, even if it is under the appraised value, rather than provide an accurate appraisal and negotiate with a borrower.
You may have more than one property slip through your fingers before you find the right fit.
VA restrictions designed to protect the health and safety of veterans and their families can make the purchase of a foreclosed property a bit more difficult.
But with the right lender, a little patience and awareness of the VA Minimum Property Requirements, you may end up with more home than you believed your budget would allow.