VA financing on a shortsale/foreclosure?

Asked by Smfrentz, Harrisburg, PA Tue Sep 8, 2009

We are considering moving to the Alexandria area for a job relocation. When we were looking at rentals we are looking at 1500 for a decent 2 Bedroom place. We are considering purchasing a home and hoping to get a short sell or a foreclosure. However, in order to get financing we would definitely have to go through his VA loan option. Is there anything we should consider when looking? Any crazy requirements that I can't seem to find out there?

Also, it has been about 2 years since we talked to a bank agent, does anyone know what the going credit score would be needed for any type of financing?

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Hm, , Burke, VA
Wed Sep 9, 2009
The one thing that I would advise is when looking for a short sale or a foreclosure home, you want to make sure that the property is in a livable condition. In other words, none that require major work because VA will not guaurantee the loan if there are amjor repairs needed on a home.

To utilize your VA, you must have a minimum credit score of 620 and have your eligibility certificate in hand if at all possible, this will expedite your loan process faster.
1 vote
Leslie Woods…, Agent, Ashburn, VA
Wed Sep 9, 2009
Thinking of Making an Offer on a Short Sale? What You Need to Know

Are you looking to buy a new home? Are you thinking that now's a great time to find bargains? That's true, but it pays to know a little about the seller's situation before you make an offer.

If a home is being sold for below what the current seller owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.

A short sale is different from a foreclosure, which is when the seller's lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.

You're a good candidate for a short-sale purchase if:

• You're very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller’s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.

• Your financing is in order. Lenders like cash offers. But even if you can’t pay all cash for a short-sale property, it’s important to show you are well qualified and your financing is set. If you're preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.

• You don’t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property—or you need to be in your new home by a certain time—a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.

If you're serious about purchasing a short-sale property, it's important for you to have expert assistance. Here are some people you want to work with:

• Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who's knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.

• A qualified real estate professional.* You may have a close friend or relative in real estate, but if that person doesn’t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they've represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as “lender approval required.”)

• Title officer. It’s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic’s lien, homeowners association lien, etc.), it's much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you’ve waited for months for lender approval. If you don’t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.

• No repairs or repair credits.
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, ,
Wed Sep 9, 2009
Hi, Smfrentz

First off, if you're looking to take advantgage of President Obama's 8000 tax credit, you would need to find and close on your new home prior to November 30th. That said, given the amount of time it may take to close a short sale (especially if the bank has not done a BPO---market analysis of home's value) yet, you may not want to consider them. Score wise, I/Shore Mortgage requires a fico of 620 for you to be eligible for VA loan consideration. I also can do a full approval within 5 minutes-24 hrs of receipt of required documents. By doing this, you'll know up front what you're approved for and you and/or your realtor will be in a greater position of strength to negotiate sale price and seller concession. This is something that can save you 1,000s in closings costs and 10s of 1,000s over the life and term of your loan. Upon a full approval, we're then typically able to close within 15-28 days of your getting a fully executed/accepted purchase agreement. Another incentive for a seller to choose you over someone else that has only a pre qualification or typical preapproval. I've extensive experience when it coms to VA financing and closing loans in your state and would be more than happy to assist you further. My profile is provide on Trulia and my contact # is: 800-678-6663 Ext 5154. I look forward to possibly assisting you further.
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Colin Storm, Agent, Falls Church, VA
Tue Sep 8, 2009
As far as your loan qualifications go, including credit score requirements, you would need to speak with a qualified lender for that information.

However, I wanted to speak to your interest in Short Sales and Foreclosures. Typically this is a way of saying you are looking for a good deal. It may well be the case that the best deal out there is not actually a property in distress, and this can be true for a number of reasons. A few of which are, 1. Long time owners who decide to sell will sometimes price their homes below the pricing threshold of distressed properties in the neighborhood in hopes of bringing a quick sale. 2. Sometimes the "discount" does not match up with the work a home needs in order to bring it up to regular market conditions, or to make it livable. 3. In a fluctuating market such as the one we are in now, getting involved in a Short Sale can possibly bring about a long enough process where by the time you close you are on the hook to pay more than the appropriate market value at the time of closing.

All that to say, going out and looking for the best deal should not necessarily mean that you exclusively target the distressed market. Hope this is makes sens (it's early), and good luck in your search.
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Leslie Woods…, Agent, Ashburn, VA
Tue Sep 8, 2009
That is a good question, Please go to our website. There you will find Homestead Mortage, Bill Bunnett is the lender we recommend. Bill is the V.P. Of the mortgage brokers association of VA. I know he will have any answer to one of your questions, please see our website attached.

Leslie Woods-Hulse
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