Finance Q&A

Do you want about Va Hud Foreclosure?

Q. I plan to be in the market for my first home within a year in Northern, NJ. I have been looking in the paper and notice a bunch of adds for Foreclosures and loans requiring little money down (FHA HUD, ETC) Have any of you had experience buying Foreclosures. If so do you have any advice? Would you do it again. With regard to the loans, what are the advantages or disadvantages of using these loans as opposed to the traditional mortgages? Any info would be appreciated!

A. I purchased a home that had been a foreclosure and didn't have any problems. FHA HUD foreclosures are homes that had FHA or VA loans. Generally FHA/VA require lower down payments and have lower closing costs. However, the inspection to qualify for these loans is more strict, sometimes to the point of being ridiculous. Because of that, it can sometimes take longer to get an FHA or VA loan approved. In the meantime, the interest rate could go up. Generally, conventional loans can be approved more quickly. Whether it's FHA or conventional, if your down payment is less than 20%, you usually have to pay for mortgage insurance. With conventional loans it's called PMI (private mortgage insurance) and with FHA/VA it's called MIP. PMI eventually gets taken off, lowering your overall mortgage payment, when the value of your property vs. the value of the mortgage reach that magic 80% point. This generally happens as the value of your property goes up. This can happen very quickly with a foreclosed property. I only had to pay PMI for 3 years, so my house payment actually went down about $30. MIP works a bit differently though, but I had a conventional loan and I don't quite know how it's different, I just know that it is.

Ask Edwards a Finance Question

Other Questions:

Can you tell me about Va Foreclosure List?

I served 6 years in the US Army, but nobody will accept my VA loan to buy a house here in Chic- ago. Suburban real estate companies say that the VA loan is no problem. I think that I am a victim of a scam? (And any other veterans that are...