Download - VA Loan Foreclosure – What It Means For You
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Foreclosure is obviously a difficult financial blow for many military homeowners.
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However, it is important to understand that defaulting on a home loan, even if it was a VA-backed loan, does not mean that another VA loan is an impossibility.
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In fact, it is entirely possible to secure another VA loan after going through a foreclosure, short sale, or even a deed-in-lieu of foreclosure.
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To effectively navigate these murky waters, you simply need to know how to proceed as well as what your responsibilities and benefits are.
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In most cases, you’ll need to wait a period of 2 years prior to pursuing a new mortgage.
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In that time, you can typically work on repairing and strengthening your credit so that you are a more viable candidate once you are ready.
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As long as it is apparent that a borrower was not trying to take advantage of the market, most lenders do not have a waiting period or a time requirement following a short sale.
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However, FHA homeowners who do undergo a short sale may be required to wait additional time before proceeding.
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A default on federal debt often forces potential buyers to wait 3 years prior to being eligible for a VA-backed loan.
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You’ll need to take several factors into consideration before proceeding with another VA-loan. Two of the primary considerations that need to be made:
Post-foreclosure purchasing
Loan entitlement
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LOAN ENTITLEMENT#1
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Eligible veterans are extended what is called an entitlement.
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Essentially, this entitlement is a financial promise from the VA to repay a portion of your loan if you default on it. In most areas, the amount the VA will cover is $104,250.
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The agency promises to repay an amount up to one quarter of the total loan amount so the most veterans can typically borrow without putting any cash down is typically $417,000 (which is $104,250x4).
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After you’ve purchased a home, part or all of the entitlement is used depending on the amount of the loan.
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If you lose the home due to foreclosure, the loan entitlement remains with the foreclosed propertyuntil the debt is paid in full, which is not typically likely in a foreclosure.
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So, in many cases, a segment of the entitlement is lost forever.
Thankfully, though, that isn’t the only consideration.
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POST-FORECLOSURE PURCHASING#2
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Depending on the amount of your previous loan as well as your location in the country, you may have enough entitlement remaining to successfully qualify for another loan.
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To determine if you have any left, you’ll want to look at your Certificate of Eligibility.
You can typically do this yourself or ask a lender for additional help.
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In addition to having an adequate amount of entitlement remaining, you’ll also need to meet the “standard” credit, debt-and-income and any additional requirements of a VA-backed loan.
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It is important to understand that just because you are still eligible and have entitlement remaining does not mean that you are definitely going to be able to secure a loan.
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In this case you would be using what is known as secondary or second-tier entitlement that carries a minimum loan amount of $144,001.
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You can apply financing of the VA Funding Fee toward this amount, but if you don’t have enough entitlement or a down payment large enough to reach that amount,a VA loan is not a viable option.
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Financing after a foreclosure is tricky, but it’s not impossible. A certified loan specialist with experience in the industry can help you get the most with your entitlement even after a foreclosure.
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In any case, though, don’t think foreclosure is the end of the story.
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Mortgage Originator Jimmy Vercellino,
specializing in VA loans, helps veterans
use their VA loan benefit to their
greatest advantage.
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Be a proud homeowner today.
For more details call 480-351-5904 or visit the site
https://www.valoansforvets.com/va-loan-eligibility/
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VA Loans for Vets7702 E. Doubletree Ranch Road, Suite 220
Scottsdale, AZ 85258
Phone: (480) 351-5904
Email: [email protected]
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