The Costs You Will Have When Buying A House With A VA Loan
A lot of people who were or currently are in the military turn to VA loans when they want to purchase homes to live in. VA loans definitely have some advantages for people that qualify, including the ability to buy a house without putting money down, but there are still closing costs involved with getting a VA loan. If this is the type of loan you are thinking about getting, here are some of the closing costs you should expect to pay.
A loan origination fee
Any type of loan you seek will have a fee called a loan origination fee. This is the fee that covers the lender's work in the deal, and it is the profit they make by offering the loan. The good news about a VA loan is that there is a limit to how much you can pay for this fee. The VA has a rule in place that limits lenders from charging more than 1% of the purchase price of the house for this fee. With other types of loans, you could pay a fee for this that is much higher than 1%.
The funding fee
Secondly, when you get a VA loan, you will always have to pay a fee known as the VA funding fee. This fee is something the VA charges, and it is based on a percentage of the loan amount. The percentage you pay is lower if this is your first VA loan, and it may also be lower if you have money to put down on the purchase. You may pay a higher rate if you have no money to put down or if this is not your first time getting a VA loan. This is a one-time fee you will pay for the loan, and it is the only fee associated with the loan that you can actually roll into the loan. You will have to pay all the other fees out of your pocket with a VA loan.
Other lender fees
Additionally, you should expect to pay some other fees that the lender will charge. This includes fees for title work, the appraisal, recording the deed, and credit report fees. There are fees, though, that you will never have to pay with a VA loan, as the VA restricts what fees a person can and cannot pay. An example of a fee you would never pay with a VA loan is a prepayment penalty. VA loans cannot have these fees, plus there are others that you will never pay either.
If you are interested in learning more about VA loans, and if you think you qualify for one, talk to a company that specializes in VA Loan Lending to find out more.