Short Sales with VA Loans

Short Sales and VA LoansAs a veteran or active member of the military, you may opt for a VA loan to receive benefits that help you buy your home, such as being able to get lower interest rates or avoid a down payment. These benefits are possible because the U.S. Department of Veterans Affairs backs these loans with a guarantee to the mortgage lender that protects them if you default on the loan.

Unfortunately, there are still times when you may need to short sell a home. Alternatively, you may be interested in buying short sales property with a VA loan. You may also be curious about your ability to get a VA loan with this type of home sale on your credit history.

In each scenario, having this type of loan involved changes how things might be done during the buying or selling process. Understanding how things work with a VA loan helps you get started working with us on handling your role in short sale.

About Short Sales

During a traditional home sale, the selling price is typically higher than the what the owner owes on the property. This allows them to pay off any remaining balance on their loan so that they avoid paying two mortgages or dealing with a foreclosure.

However, there are times when a person must try to sell their home for less than what they owe on their loan. These are called short sales. When this happens, the house is usually listed for the current market value. Then, bids are taken from prospective buyers and submitted to the lender for approval.

Without a VA loan, the bank must accept the possibility of losing out on the difference between the price of the house and the amount still owed on the loan.

Needing to Short Sell With a VA Loan

When you have a VA loan in place, a short sale is called a compromise sale. Since the loan has government backing, the lender can receive the full amount of the deficiency between the selling price of the home and the loan.

However, you must meet certain qualifications to short sell a home on a VA loan. For example, you must demonstrate that you have a financial hardship, such as major medical expenses, or the recent death of one of the primary earners in your household.

If you believe that you need to short sell your home, then you will need to initiate the process by contacting your loan servicer. You may be asked to provide proof of financial hardship and to complete a Compromise Sale Agreement application.

Buying a Short Sale Home

The decision to purchase a short sale home provides some advantages, such as being able to get the best price on the house that you want. However, VA loans are only issued for houses that meet specific appraisal standards. The house that you want to buy must be in livable condition, and this means that some repairs may need to be done before you can get approval for the loan.

Getting Approved for a Loan After a Short Sale

Your ability to get a VA loan with a short sale on your record depends upon several factors. If you were up-to-date on your mortgage payments, then you may be eligible for a loan shortly after closing on the sale. However, there may be a waiting period of up to two years if you were late on the payments, or have a previous foreclosure in your history.

While short sales do complicate the home buying or selling process, there are times when they are necessary and potentially beneficial. Always ask your mortgage specialist about how short sales could affect your VA loan eligibility, so that you can make the best informed decision for your situation.


Veterans – Now is the Time to Buy a New Home!

Buy a New Home - Now's the Time!

The decision to buy a new home is a huge one, and it is possible that you’ve been sitting on the fence for quite awhile now.

Although we always encourage veterans to give the home buying process a lot of thought, it also hurts us to see someone let an opportunity go to waste.

Waiting too long to buy a house can sometimes put you in a bad position.

For example, you could wait so long that the house you want increases in price. Right now, the market is ripe for you to pick out a house.

Lock In a Lower Home Price

With the current housing trend, you can only expect to watch the prices rise. Waiting to make your move could mean that you have to spend thousands more on a house.

Although home prices are rising everywhere, this is an especially big concern in the more desirable parts of the Phoenix area. Both new and older homes in areas that are experiencing rapid population growth are going for higher prices every day. If you have your eye on a certain location, then consider how much more a house could cost there in the next few years.

Start Building Equity Now

Equity is the amount of your home that is considered yours once the debt is taken into consideration. There are two ways to build equity for a new home.

Your equity increases when the house goes up in value. Since home prices are rising, buying today puts you on the winning side of that equation. The other way to build equity is to reduce your debt. The payments that you start making this year go toward your debt, which means that you will have more equity in your home by the end of the year.

Take Advantage of Stable Interest Rates

Home mortgage loan interest rates fluctuate from time to time. When you consider the cost of a house, even a point of interest extra can result in you spending much more money on your payments over the years.

Currently, the interest rates in Arizona are stabilized to one of the lowest points that they have been at for years. While we wish we could say that they will stay that way, the truth is that they will eventually rise. If you’ve been waiting to buy a new home until the interest rates go down, then we have to tell you that the time couldn’t be better for locking down a low rate.

Capitalize on Higher VA Loan Limits

As a veteran, you can also benefit from VA loans that currently offer you higher limits on a home than you could get in the past. Being able to secure the financing for the home that you truly want means that you can also benefit from being able to use your military benefits. VA loan limits can also go down, so this is an opportunity that you don’t want to waste.

There is no time like the present for making a decision that brings greater happiness to your life. Buying a new home does take time, so get started today to build a brighter financial future for tomorrow.