Both veterans and non-veterans can purchase a foreclosed Veterans Affairs Real Estate Owned property if a third group does not buy the home at the foreclosure sale. The possession of the VA home by veterans or non-veterans can be financed via vendee financing, categorically known as VA Loan/Finance Program.
Have you ever thought about what happens to the borrowers who stop paying their VA loans? Similar to the case of any other mortgage levant, non-payment of VA loans starts with the foreclosure process. The VA then put these foreclosure homes for sale through its VA vendee financing, which is a great opportunity open to veterans and non-veterans looking to buy a new home. But, before learning about how to get vendee financing done, we must know what Vendee Loan Program is and how it works.
What Is Vendee Financing or VA Vendee Loan Program?
Vendee Financing called the VA Vendee Loan Program, is a loan arrangement that allows qualified borrowers to purchase and take possession of VA REO properties by making little to no money down payment. Apart from veterans and non-veterans, investors and owner-occupants are also allowed to buy VA REO homes.
Vendee financing is a competitive and affordable loan option that makes it a different seller providing loan products for the buyer of the VA REO properties. A Vendee is a feasible substitute for traditional financing. Let us go through some quick facts about vendee financing before learning about the loan application process.
Quick Facts About VA Vendee Financing
- VA Vendee Loan Program is open for veterans, investors, non-veterans, and owner-occupants.
- This seller financing vendee option attracts little to no money down payment.
- Loan providers may add the originating and funding fees to the loan (There is a 2.25% funding fee that the VA charges for all the VA Vendee loans they approve).
- The loan offers either 15 years or 30 years term options.
- This loan option comes with a competitive interest rate.
- As an additional benefit, the seller may make a monetary contribution towards the closing cost by the seller.
- There is no requirement for an appraisal.
- There are no prepayment penalties applicable under vendee financing.
- There is no need for mortgage insurance.
Whom To Contact For A VA Vendee Financing?
The VA Vendee Loan Program is almost similar to the VA loans but has two significant changes. First, the lenders can issue the vendee loan to any qualified borrower. And, secondly, investors who receive the vendee loan can use it for buying rental properties. The VA also stands as a guarantor for its vendee loans, just like its standard home loans or VA loans.
Due to the rise in the VA REO portfolio, the Department of Veterans Affairs decided to outsource the management and sale of the VA REO properties on a contractual basis. Vendor Resource Management (VRM) holds the current contract, whose landing arm, named VRM Lending, is the concerned department for issuing all the loans via its vendee financing or VA Vendee Loan Program.
Steps To Get Vendee Financing Or The VA Vendee Loan Program:
Step 1- Get yourself pre-screened with VRM Lending:
The first step toward VA Vendee Loan Program is to see whether you are qualified to get vendee financing or not by getting yourself pre-qualified with VRM Lending. For this, you need to contact a VRM loan officer and discuss your overall financial picture with him. Post this; the underwriters will analyze and evaluate each file individually to reach a firm conclusion whether or not you fulfill the pre-qualification criteria.
Step 2- Look for VA REO Property that you are eligible for:
If you are approved as a qualified borrower for vendee financing by VRM Lending, your next step should be to find a VA REO home. The local agents of the VA REO properties list all the homes that are up for sale through the Multiple Listing Service (MLS). However, you can directly contact VRM when searching for homes.
Step 3- Submit your application for Vendee Financing:
You can make an official application for the vendee seller financing program when you have found an appropriate VA RO property for your purpose. This official application include-
- Social Security number verification.
- Income verification.
- Property information, i.e., address and desired loan amount.
- Credit Check authorization.
After submitting all the above credentials correctly, the loan officer at VRM will run a credit check and send the first disclosure to you. This is the only point where you get to decide for the last time whether you want to proceed with the loan or not.
Step 4- Processing of the Land and Underwriting:
If you choose to proceed with vendee financing, your dedicated loan officer at VRM will intimate about this to an underwriter and forward your credit details and complete mortgage package to him. This underwriter will go through the entire package to check whether or not the package meets the standard lending requirements.
Step 5- Signing the Closing Disclosure and Closing the Loan:
The last step constitutes sending a closing disclosure (CD), which VRM will ship once the underwriter conditionally approves your vendee financing application. The CD comprises all the loan details that have to be received and reviewed at least three days before closing. Once you have acknowledged the receipt of the CD, you shall sign all the closing documents, after which the lender will arrange for the release of the funds to buy the VA REO home.
Therefore, vendee financing or VA Vendee Loan program is an excellent opportunity for all those who are looking to buy a new house simply because of the benefits it provides to the loan receiver compared to any traditional housing loan. Investors opting for this loan have to pay 5% as down payment along with property management experience, the sellers can contribute up to 6% of the total sales price towards the closing cost, all the VA REO properties are sold “AS IS” at or below the fair market value, and many more. So, what’s stopping you from applying?
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