A short sale is when a seller has to work with their current mortgage holder to take less than that mortgage holder is owned because the property is now selling for less than the total mortgages on the property. Short sales have become common with the fall in home prices the past few years, but they have been time consuming and difficult to complete. Most buyers when looking for a good deal have instead chosen to go after bank owned properties, because with a bank owned property they have more certainty that they can close.
Short sales may however start to become easier and get completed faster. U.S. Treasury officials may soon offer a $2,500 subsidy (some to the loan servicer and some to the seller) to encourage short sales as a way to clear out their excess inventory of defaulted loans. The purpose of this cash is an incentive for the loan servicer to complete the short sale faster and for the current seller to leave the house in decent condition.
This is good news for VA borrowers obtaining a VA home loan for a number of reasons:
- This will add more sellable inventory to the market. In many markets in California and other states the inventory on the market has been low due to the banks holding back on foreclosing on homes. This has frustrated VA loan buyers and it has taken them a long time and much searching to get their purchase offers accepted.
- Short sales are often easier to work with than bank owned properties. Bank owned properties are often extremely competitive with multiple offers and VA Loan borrowers are competing for these properties against buyers with all cash offers that are preferable to the selling banks.
- Short sales tend to be in better condition than bank owned properties. Many times when homes are foreclosed on by banks the former sellers strip the property or damage it before they leave, and the bank owned properties can sit vacant sometimes for years causing damage.
- As a buyer you are likely getting an excellent price on a short sale, buying the property for much less than the current owner bought the property previously.
So make sure when you are out looking at properties with your Realtor you don’t overlook short sales. You can often get a very sweet deal for yourself.
And remember the benefits of using your VA Loan eligibility:
- 100% financing
- VA funding fee waived if you receive service related disability pay
- 50 year low 30 year fixed rate
- Sellers can pay all your closing costs
- VA Loans are not credit score driven
- NO monthly mortgage insurance
- Loan amounts above $700,000 available in many markets in California
Please call 858-922-7899 or email homeloan8@gmail.com if you have any questions about getting approved for a VA Loan.
Warm Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
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