VA Loan Closing Costs and Fees
What are VA Loan Closing Costs and how much are they? Veterans purchasing a new home are required to pay closing costs but as a Veteran you have certain benefits when it comes to VA loan closing costs. Veterans pay what is called “allowables”. Allowables are the things that veterans are allowed to pay associated with mortgage closing costs. These things include the following; Appraisal fees, Credit report fees, Title fees, Origination fees, Recording fees, and sometime survey fees. An easy way to remember these is with the acronym ACTORS. If there are other fees associated with the loan these are called non allowables. Unfortunately the sellers usually will have to pay these fees in a VA loan. VA mortgage lenders are required to provide what is called a Good Faith Estimate. This document provides information of the service fees the borrower will pay at the time of closing. Some of the things that may not be listed on a Good Faith Estimate are prepaid hazard insurance and the listing of reserve deposits. It may be also important to take these things into consideration. When the time comes to close on your home purchase you the borrower will also be asked to sign a Final Settlement Statement known as a HUD-1. This document will list all the closing cost fees.
VA Origination Fees
Most lenders will charge what is called a loan origination fee. This fee is used to cover the costs of processing the loan. Origination fees vary from loan to loan but are usually anywhere form 1% to 6% of the of the total loan amount. So for example if you were going to purchase a $100,000 dollar home and the lender charges a 1% origination fee the cost would be $1,000. The good news is the Veterans Administration has a cap on what veterans can pay to obtain a VA Loan. VA lenders have a cap on what they can charge. A 1 percent origination fee and a 1 percent fee for administrative costs. The closing cost adjustment is designed to keep lenders from charging veterans those closing costs that VA has determined as being beneficial to the lender and not necessarily beneficial to the veteran. Sellers can pay up to 6 percent of closing costs on a VA loan. The one charge Veterans can expect to pay is the the VA funding fee. This is a mandatory cost that keeps the VA home loan program running. This fee is automatically financed into the loan so the borrower will not have to pay out of pocket. Borrowers with a military service disability will not have to pay the VA funding fee.
If you have any questions about VA loan closing costs, call Call Now to Speak with a VA Home Loan Specialist 1-855-956-4040