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Mortgage Research Center — NMLS #17094
Until 2007, finding a "no money down" mortgage loan was fairly easy. If you had good credit, income that could be verified, and were willing to pay a slightly higher interest rate or use unconventional mortgage terms to finance your home, you could get a home with "no money down".
In addition, many lenders would bundle your closing costs into the loan, letting you finance the $2,000 or more that a homeowner typically pays for the closing on the home purchase. Under this scenario, tens of thousands, if not hundreds of thousands, of homeowners were able to buy in the 1990s and 2000s with little or no money out of pocket.
As credit markets have tightened and mortgage loan restrictions have become increasingly strict, finding no money down mortgage loans has become more difficult, but not impossible. In particular, Veterans and Military members have the opportunity to get a home with no money down. You can still use the Veteran's Affairs Home Loan Guarantee Program and find a way to purchase a home with very little cash up front.
How? Buy a foreclosed home on the VA home list. As foreclosures increase in the United States, people with VA Loans sometimes default. Because the VA guarantees the mortgages on those homes, the VA owns the home once the foreclosure takes place. The VA pays insurance to the mortgage lender that originally lent money to the borrower. The VA is not a home management and wants to turn around and sell the VA-owned home as quickly as possible. One way the VA does this so is to sell the home with no money down.
Continuing with our discussion, here's a typical scenario: the VA owns a foreclosed home valued at $100,000. The VA wants to sell the home for $95,000. There is an upfront fee (perhaps $750)for buying the home, which the buyer must be submitted when the buyer bids on the property. Some VA-owned homes are popular and receive many bids, while others receive none. If your bid is chosen, you will work with the VA and a VA-approved lender to get into your home.
Only Veterans and active duty Military members can get special financing for these homes; civilians must use standard FHA Loans to finance the "no money down" homes. To learn more about buying a VA-owned home, find a realtor in your area who handles HUD- and VA-owned homes.
We are the online VA Loan Specialists. It is our goal to ensure that your VA Home Loan process goes as smoothly as possible. Let us help you get the process started online today, or call us at 800-405-6682.
If you need advice concerning Veteran Home Loans, feel free to contact a VA Mortgage Specialist online or call 800-405-6682. Specialists can help determine whether a Veteran Home Loan is the best financial decision for you.