We recently discussed VA Loan funding fees, which are required of all veterans buying a home through a VA Loan, with the exception of those who receive a service-connected disability payment from the VA (or would receive it if they weren’t receiving retirement pay), and a surviving spouse of a veteran who died while in service, or of service connected disabilities. While that covers funding fees, it doesn’t cover all the associated VA Loan closing costs and fees you may be required to pay. Let’s cover a few other closing costs and fees home buyers using the VA Loan might experience.
VA Loan Closing Costs
The VA has strict rules regarding which fees veterans are required to pay, and which fees are considered non-allowable. Those fees which are considered “reasonable and customary” by each local VA office are considered allowable, otherwise they cannot be charged to VA Loan borrowers and are generally paid for by the seller. If you are applying for a VA Loan, you should be aware that some, or all, of the following fees may be applicable to your VA Loan application. Additionally, the lender may charge a fee equal to 1% of the loan, which can be used to cover expenses not on the following list:
- VA Loan Closing Fees. These are generally minimal if non-existent, and are often rolled into the purchase price of the house.
- VA Loan Funding Fees. Unless you are exempt, VA Loan funding fees are required by federal law.
- VA required inspections and appraisals. The VA requires certain home inspections to be performed before they will fund the loan. The house must be in good repair, must match the description on all documentation, and it must appraise for the sale price or higher.
- Credit report and score. This is charged by the lender, and is required. You can expect to pay around $15-$40 for this, but be sure to get it in writing before agreeing to pay – anything over $40 is excessive (note: you can get your own free credit score for personal use).
- Title Insurance. This is essential, especially in our current economy. Many properties have been affected by foreclosures, fraud, and other serious problems – protect your investment!
- Flood zone determination. Your lender will require you to carry flood insurance if your new home is in a flood plain or flood hazard area.
- Survey. If required.
- Taxes and assessments. Home buyers may be required to pay a portion of taxes or other assessments based on federal, state, and local laws.
- Recording fees, documentation fees, and postage. Some lenders charge a variety of documentation and mortgage preparation fees. Be sure to get an itemized list in writing before going to closing so you have a good idea of what you are being charged, and whether or not the rates are reasonable.
Additional VA Loan Closing Fees
As mentioned above, the VA has strict rules regarding which fees cannot be charged to veterans. These fees are generally covered by the lender out of the flat 1% fee.
- Documentation fees
- Notary fees
- Mortgage assignment and transfer paperwork
- VA Loan application fees
- and more
You should be aware that many of the fees associated with a mortgage are negotiable and should be discussed in advance of closing. Always review any associated fees and question them if you are in any doubt regarding the nature or cost of the fees. This is your home loan and your money, and no one cares about it as much as you do!
Do you know of any other VA Loan related fees?