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Sil, Home Buyer in Boston, MA

VA loans and fixer upper/ foreclosure homes

Asked by Sil, Boston, MA Wed Mar 18, 2009

Does anyone have experience with VA loans purchasing a fixer upper or short sale/ foreclosure property? We hear all kinds of stories about houses not being accepted for as little as some peeling paint. It seams that the price range we're looking at, is going to be a "TLC home". ($250'000 or less) Also does it take a lot longer for a sale to go through and are sellers disencouraged by those loans? thanks a lot

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Peeling paint is a specific problem for FHA/VA loans on exterior surfaces exposed to the weather where the surface is designed to be covered from the weather, ie., stain is not a problem, but paint is. These loans do have specific hot buttons to consider and your mortgage person can make you aware of the issues before you consider a particular property. You won't have a problem with REO/short sale properties more than other regular sale properties. The difference is that owners of REO/short sale properties will not likely be interested in dealing with the required repairs specified by the appraiser. The repairs are the buyers' responsibility, but sometimes have to be completed BEFORE transfer when the buyer does not have the money to do the work because they're putting all of their available funds into the transaction. Therefore, sellers sometimes make the repairs just to get the property sold.
You should be able to work a 203k style loan for these properties in most circumstances so that the repairs are completed after transfer and the cost is rolled into your loan.
The biggest advantage to VA is usually the lack of down payment requirement. If you do have downpayment money available, you may find it easier to go with another loan program. Sellers aren't necessarily against accepting a buyer using these programs but with competing offers they may find it easier to accept a buyer without these limitations. It may take a couple of weeks longer to process the transactiln/loan with these loans, but the time required isn't excessive.
My area is tipping towards a Seller's Market at this point due to extremely low inventory, and buyers are now more competitive with each other. We're used to VA/FHA loans and not afraid of them.
good luck-Paul
Web Reference: http://www.lynnforsale.com
1 vote Thank Flag Link Wed Mar 18, 2009
Sellers are not necessarily discouraged, they really want to sell right now. VA inspectors are definitely tougher on homes than a conventional appraiser. Just consider it an extra layer of protection for you as the buyer.
1 vote Thank Flag Link Wed Mar 18, 2009
VA loans as with other government loans, FHA and RDA, they have their own appraiser/inspectors. They have a check list that they go thru when appraising/inspecting. The appraiser/inspector for government loans will look at life safety issues. If you are considering buying a foreclosed property find out the kind of loan they will accept and ask an appraiser for a copy of the check lsit they have to use when they check the property.Foreclosed properties should tell you in the listing what type of loans that they will accept. Some REO properties will even accept FHA 203's. Yes, in general they will take longer. It depends upon whether you are buying a home thru Fannie Mae, Freddie Mac, HUD, or a Bank. Each have different paper work and time frames. In general they do not comply to your states contract but will at some point send their contract that states theirs supercedes your states contract thus your time frames kind of go away.
0 votes Thank Flag Link Wed Mar 18, 2009
I would suggest contacting a mortgage lender who does VA loans and they should have some info. they can give ypu on exactly what is or isnt accepable as far as home condition. Also, perhaps there is a way to finance $ in to the loan to do the required work. don't give up, get more info. Good Luck!
0 votes Thank Flag Link Wed Mar 18, 2009
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