Va Loan Closing Costs
With a VA loan, as with traditional loans, there are closing costs that need to be considered and factored into the home buying process. This can get quite expensive when you start adding up all the little fees and expenses. Luckily, the VA regulates and limits closing costs so you will never be caught off-guard with exorbitant closing fees. In some instances the seller will pay the closing costs, but if not, there is a limit set by the VA on the total closing costs. Here are some closing costs you should be prepared to pay.
Loan Origination Fee
A fee of 1% of the total loan amount may be charged by the lender for itemized costs. This fee is a flat rate of 1% and must cover all charges associated with the administrative costs of processing the loan.
Loan Discount Points
Discount points are charged if you want to get an interest rate that is below the current
Mortgage market rate. Up to two discount points (or 2%) is considered a reasonable charge.
The VA charges a one-time fee that varies depending on the amount and type of loan.
The veteran is expected to pay for their credit report.
Appraisal and Compliance
The veteran is required to pay the VA for the appraisal and compliance inspection.
Recording fees, recording taxes and any other type of recordation is chargeable to the borrower.
Pre-paid fees include any taxes, assessments, and other similar items for the current year that is chargeable to the borrower for the initial deposit of the tax and insurance account.
The borrower pays for the survey fee if there is one.
Title Exam and Title Evidence
All closing fees can be paid out of the proceeds of the loan itself. The veteran does not have to pay a service or brokerage fee to any third party for procuring the loan.
It’s important to go over all your expenses before you start the closing process. A mortgage lender is required by RESPA to provide a Good Faith Estimate of all the settlement service charges. If you find the fees too expensive, you can negotiate with seller to have them pay some or all of the closing costs. In this case, you will need to factor all the fees into your offer on the house so it is covered by the loan.
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