VA Loans for Short Sales

Some people theorize that our military men and women get the short end of the stick when they return home to their normal lives. The Veteran’s Administration (VA), however, rewards veterans for their service to this country by offering programs to make their lives easier, including the VA home loan program. One way for an American who has given military service to make maximum use of a VA mortgage is to buy a home through a short sale.

What’s a short sale?

The recent economic downturn has put an overwhelming number of homeowners in distress, looking at the possibility of foreclosure. One way to avoid that path is to sell the home via a short sale, which occurs when the proceeds from a property’s sale are lower than the mortgage balance. The seller’s bank must agree to this arrangement, and does so because the reduced price is a much better deal than the time and expense of foreclosure.

VA Loans and short sales

A VA loan is as good as any other currency for buying a distressed property. The short sale process, however, is slightly different than purchasing a regular home. Here are some tips that can help military personnel through the process.

    1. You’ll need patience. Short sales typically take longer to close than conventional house sales. If your offer gets accepted, closing could take up to six months or longer. If you want to move quickly, a short sale is not a good idea.

    2. Termites can kill the deal.  The VA requires termite clearance on a home sale. But the VA will not allow the buyer to pay for the inspection out of his pocket, and the seller’s bank may not allow the costs to come out of the sale’s proceeds. Many buyers can’t afford the cost of such inspection themselves, so it can become a catch-22. No inspection, no loan. No one allowed to pay for inspection – no inspection. End of deal.

    3. Appraisal pains. The Veteran’s Administration requires that a VA appraiser does the appraisal. Some realtors have found that these professionals are tougher than conventional ones, and may request that small items, like broken windows, be repaired. If the buyer is short of funds, these repairs may not be made, and the deal can’t close.

It’s important to locate a realtor who has experience in both short sales and VA loans to guide you through this process. With VA loans typically taking longer to close than conventional mortgages, an experienced realtor can stay on top of all the paperwork and loan professionals involved, and make sure that it closes in a timely fashion. An experienced pro can help minimize delays, because she can anticipate potential pitfalls.

Veterans earn their benefits as a result of helping make this country a safer and more stable place to live. With a short sale, a military man or woman can use a VA loan to purchase a dream home at a reduced price. That’s a worthy reward.