VA Loan and Refinance Loan Expenses and Fees, You Should Know About!

If you want to start planning for a new VA home loan or refinance loan in 2015, you should include some room in your budget for certain fees and expenses related to VA mortgage loans that might affect you.

There are many things to keep in mind about your VA refinance loan or new purchase loan. For example, the VA does NOT set or regulate mortgage rates, so you will be required to negotiate those rates with your lender.

 If your credit scores aren’t as good as they could be you may be required to make a down payment in certain cases, or you may need to anticipate a higher mortgage payment due to a higher interest rate. The lender and the borrower must negotiate these interest rates, discount points and closing costs--all things that may or may not (depending on the nature of the expenses) be financed into the loan amount.

You should anticipate a VA loan funding fee--not a fixed dollar amount, but a fee that varies based on the amount of the loan and any down payment the borrower might choose to make.

Many  borrowers know that typically, VA loans do not require a down payment, but if the appraised value of the home is lower than the closing cost, the borrower would be required to pay the difference up front. You may also wish to make a down payment in order to lower the VA loan funding fee. This can be a good strategy for those who can afford to do so.

When it comes to closing costs, the VA official site advises borrower, “Closing costs such as the VA appraisal, credit report, state and local taxes, and recording fees may be paid by the
purchaser, the seller, or shared.”

Your house seller is permitted to pay a certain percentage of your closing costs under the rules of the VA loan program, but there are limits and you should know what those rules are. “The seller can pay for some closing costs. (Under our rules, a seller’s “concessions” can’t exceed 4% of the loan. But only some types of costs fall under this 4% rule. Examples are: payment of pre-paid closing costs, VA funding fee, payoff of credit balances or judgments for the Veteran, and funds for temporary “buydowns.” Payment of discount points is not subject to the 4% limit.)”

For more information on any of these fees or expenses, discuss your needs and questions with a loan officer for more information or contact the VA directly to get a general idea of what to expect, expenses-wise.

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