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Can You use the VA loan.....

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Can you use the VA loan to purchase foreclosures or short sales?

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August 19 - Jacksonville

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Bob Lowery, "Bob Lowery"
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Bob Lowery, "Bob Lowery"

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Zillow All-Star

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You can use VA to purchase foreclosures and short sales. The only risk is that if there are repairs needed, you would need to complete the repairs yourself prior to settlement, which could be a concern since you don't own the property. However, this is the case for all loans. There can be repairs needed on FHA, VA, and conventional loans.

I have done several of these going all three routes and repairs have sometimes been required with all three programs. In most of the cases, the buyer took the risk and did the repairs since they were somewhat minor and were getting the home below market value.

There are risks in buying these homes with any program. The loan officer and realtor need to educate the buyer and advise them of the risks that are associated with buying a home "as is".

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August 22

Bob Lowery, "Bob Lowery"
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Bob Lowery, "Bob Lowery"

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Zillow All-Star

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What is even worse is giving out incorrect information. I am still a little puzzled why some realtors insist on answering mortgage lending questions if they don't know the answer.

Gregorio, another thumb's up!

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August 22

Bud Smoker, "Bud Smoker"
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Bud Smoker, "Bud Smoker"

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Ellen, its acceptable not to have all the answers but you should sure as heck make sure you know where to find them for your clients. Huge waste of time if your information source sucks.

Gregorio, THUMBS UP!

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August 22

Gregorio Denny, "Gregorio Denny"
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Gregorio Denny, "Gregorio Denny"

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Zillow All-Star

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Ellen,

I'm not sure where your lender is getting their information, but it's not from the VA handbook. There is nothing that says a borrower cannot pay their own escrow and it's completely untrue that VA borrowers do not have funds to put down. Va borrowers are veterans who qualify for VA financing and may CHOOSE to put less or even nothing down because they are afforded that privilege. The draw to a VA loan is the lack or mortgage insurance and if the property is eligible, underwriting is really no different than any other loan. Experience has nothing to do with understanding VA loans, education does. Realtors fear VA and FHA loans because they don't understand them. It's a Realtors fiduciary duty to be informed enough to advise clients properly. Sellers that stray away from VA and FHA borrowers are losing out on clients that are well qualified, with or without large down payments. You really should never just rely on one source for information and engrave it in stone as the truth.

Here is a link to the VA handbook, it's a boring read but should be required reading for all who advise clients about what is best for them.

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August 22

Ellen Hayes, "EllenHayesHomes"
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Ellen Hayes, "EllenHayesHomes"

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Answering Gregorio's comment: I actually meant to say paid by the SELLER, but this is my understanding as explained by the lender I use: There are costs like the buyer's escrow that cannot be paid by the buyer but can be paid by realtors, lenders or sellers. Someone has to pick up the tab cause VA will not allow the buyer to pay. In my experience, VA buyers are usually utilizing a VA loan not having funds to put down themselves and so want/need to ask the SELLER to pay those costs... I'm glad to hear what you feel is the right course as even after 20 years in the business, I am always learning and willing to listen!

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August 22

Gregorio Denny, "Gregorio Denny"
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Gregorio Denny, "Gregorio Denny"

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Ellen, please tell us what costs VA requires the lender to pay on an REO or short sale. I would love to know.

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August 21

Ellen Hayes, "EllenHayesHomes"
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Ellen Hayes, "EllenHayesHomes"

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In a word: Yes..... in more words... be aware that due to your VA loan requiring certain costs to be paid by the lender involved in the REO or short sale, you may have some difficulty getting your offer to fly. If the lender has other offers that are NOT requiring this, your offer may not "shine" in the eyes of the lender. There are ways of making this work and this is where the expertise of a highly experienced Realtor comes in.. Where I am, (in Southern California) we are having multiple offers on our short sale and REO properties which can make it very exasperating for VA buyers. I've heard from a few inexperienced agents that they've written several offers for VA buyers that have all failed. Hopefully you already have a good Buyer's representative who will guide you well. Keep in mind that you don't have to pay for their help as the seller or lender pays them for their services at the close of escrow. Having a good Realtor's help is the smart thing to do.... Good luck!