TYPICAL VA LOAN CLOSING COSTS
TYPICAL VA LOAN CLOSING COSTS: As with all mortgage loans, VA Home Loans too have closing costs associated with originating a VA loan. The beauty of VA Loans however is that these closing costs a very controlled and VA Lenders are limited in what the Veterans Administration will allow VA Lenders to charge for various fees. Although some fees and costs may very from lender to lender, other fees and costs are constant with all lenders based upon the VA administrated directives. This is in an effort to protect the Veteran or Service Member from excessive fees and charges.
An Approved VA Lender is permitted to charge reasonable costs and fees associated with originating a VA Loan and in most cases, these costs may not be included in the loan with the exception of the VA required Funding Fee.
The following items may be paid by the Veteran, the seller, or they may be shared. It is important to note that a Seller can contribute up to 4% in concessions towards the Veterans closing costs which can make a considerable dent in the Veterans cash requirement at closing.
TYPICAL VA LOAN CLOSING COSTS
-
VA Appraisal : Typically $400 to $500.00
-
Credit Report: Typically approx. $60.00
-
Loan Origination Fee: Typically 1% percent of the loan amount or the lender can itemize the fees but cannot exceed 1% of the loan amount. Typical itemized fees are as follows:
- Application and Processing Fees
- Document Preparation Fee
- Loan Closing or Settlement Fee
- Notary Fees
- Interest Rate Lock-In Fee
- Tax Service Fee
- Delivery/Wire Fees
- Commitment or Marketing Fees
- Trustee’s Fees/ Charges
-
Discount points: Only when buying down the interest rate
-
Recording fees: Typically $20.00 to $75.00
-
Survey: Not required in some states and counties but if necessary, the cost can vary greatly
-
Discount Points: Charged only if the Veteran is buying down the market interest rate to a lower rate. This fee can be paid by either the buyer or the seller
-
Title Policy and Title Insurance: This fee varies from state to state but typically ranges from $600.00 to $800.00
-
Recording Fees (Filing the closed loan trust deed): Typically between $20.00 and $60.00
-
Hazard Insurance and Property Tax Pre-Paid's: These are escrowed reserves that are based on the current subject rates
Typical total closing costs can be estimated to be between $3000 to $5000 depending on the loan amount and not taking into account any discount point to buy down the interest rate if a Veteran chooses to do so. It is always a good idea on a new purchase to ask the seller to contribute to these costs in the form of a Seller concession. this concession can be as much as 4% of the loan amount.
What are allowable costs that can be paid by the seller as a part of a Seller Concession?
- Payment of the buyer’s VA funding fee.
- Prepayment of the buyer’s property taxes and insurance.
- Gifts such as a television set or microwave oven.
- Payment of extra points to provide permanent interest rate buy downs.
- Provision of escrowed funds to provide temporary interest rate buy downs.
- Payoff of credit balances or judgments on behalf of the buyer.
