VA Fees & Costs
The veteran can pay reasonable and customary amounts for any of the “Itemized Fees and Charges” designated by VA as defined below. In addition, the veteran is allowed to pay an origination fee if charged by the lender.
- ITEMIZED FEES AND CHARGES The VA defines allowable fees and charges that the veteran borrower can pay or closing costs that may be charged to the borrower. These costs are determined as reasonable and customary by each local VA office. All other costs in the transaction are considered non-allowable and generally paid by the seller when purchasing a new home or by the lender when refinancing your current VA mortgage. Itemized fees and charges are as follows:
- APPRAISAL AND COMPLIANCE INSPECTIONS The veteran can pay the fee of a VA Appraiser and VA compliance inspectors. The veteran can also pay for a second appraisal if they are requesting a reconsideration of value. The veteran cannot pay for a second appraisal if the lender or seller is requesting a reconsideration of value or if parties other than the veteran or lender request the appraisal.
- RECORDING FEES The veteran can pay for recording fees and recording taxes or other charges incident to recordation.
- CREDIT REPORT The veteran can pay for the credit report obtained by the lender.
- PREPAID ITEMS The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account.
- HAZARD INSURANCE The veteran can pay for the hazard insurance premium. This includes flood insurance, if required.
- FLOOD ZONE DETERMINATION The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination.
- SURVEY The veteran can pay a charge for a survey, if required by the lender.
- TITLE EXAMINATION AND TITLE INSURANCE The veteran may pay a fee for title examination and title insurance, if any. If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.
- SPECIAL MAILING FEES FOR REFINANCING LOANS For refinancing loans only, the veteran can pay charges for Express Mail or a similar service when the saved per diem interest cost to the veteran will exceed the cost of the special handling.
- VA FUNDING FEE Unless exempt from the fee (10% minimum disability from the VA), each veteran must pay a funding fee to VA.
- OTHER FEES AUTHORIZED BY THE VA Additional fees attributable to local variances may be charged to the veteran only if specifically authorized by VA. The lender may request VA to approve such a fee if it is, (a) normally paid by the borrower in a particular jurisdiction, and (b) considered reasonable and customary in the jurisdiction.NON-ALLOWABLE FEES The following list provides examples of items that CANNOT be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat 1% origination fee or they can be charged to the Seller.
Loan closing or escrow fees, document preparation fees, preparing loan papers, attorneys services other than for title work, photographs, postage and other mailing charges, notary fees, preparation and assignment of mortgage to other secondary market purchasers, trustee’s fees or charges, loan application or processing fees, administration fees, fees charges by loan brokers, finders or other third parties, and tax service fees. (Bolded items are most common for our business area. List is not all inclusive. For a complete list, reference the VA Lender Handbook).
Pest Reports and required work are normally paid for by the Seller on purchases. For Cash Out Refinances, the Veteran would be required to pay. Pest Reports are Not Required on VA Streamline rate reduction refinances. Call Doug Bullwinkel for details on Pest Report requirements.
Previously, The Veteran COULD NOT PAY THESE FEES. Due to changing Market Conditions, VA will now allow these fees to be paid through Lender Premium Pricing or be deducted from a Loan Origination Fee charged to the Veteran. If seller is paying these Non-Allowable fees, then the Loan Origination fee may not be charged to the Veteran.
When reviewing allowable borrower fees and charges, many of the items can be paid for by the seller of the home and can be negotiable when presenting an offer on a home to the seller. Please consult with your Real Estate Professional handling the transaction.
It’s a very good idea to have your Realtor and your lender discuss your offer prior to it being presented to the seller. Good communication between all parties will help to make your home buying experience a pleasant one, with no surprises.
Contact Doug Bullwinkel at Academy Mortgage for any questions related to your new VA home loan.