One of the first options military personnel consider when buying a home is to apply for a VA home loan. A VA loan is an attractive option because of its affordability and does not require a down payment. Most estate agents and mortgage lenders recommend that you at least consider VA loans. Only if the down payments are below the private mortgage insurance.
What are VA fee’s?
Understanding the details of the fees that apply to borrowing can be an overwhelming process, even for those with a second or even third loan!
Simply put, there is a financing fee to offset the cost of a VA loan. These fees also help to relieve US taxpayers of the full burden of lending. Fees that buyers must pay during the VA home loan process include so-called financing fees. Financing fees are levied on both purchase and refinancing loans, with a few exceptions.
The Department of Veterans Affairs receives funding for these fees to ensure that active service members pay lower dues. The financing fees are adjustable according to several factors, such as your military service, down payment amount or if you’ve previously used a VA loan.
Here’s a breakdown of how the Veterans Administration calculates these fees and how they differ for different types of loans. (graphic of va fees)
Each has its own function and the financing fees vary enormously depending on the specifics of the loan. On a typical VA loan taking out lets say $200,000 for the first time would need to pay an additional $4,300 to cover the lending fee.
But can the VA fee be waived?
First off, the amount of housing benefits you apply for does not matter, but there are several official circumstances in which the fee is waived. This fee can be waived for the first $1,000 or less of a loan – at income ratios of $2,500 or more.
The VA offers three scenarios that typically define who is exempt from paying the eligibility fee: veterans who die on duty or in service, surviving spouses of veterans and veterans with disabilities. The VA also has the power to consider certain requests for waiver of the grant fee. Part of the mortgage approval process is that the lender checks the status of your financing fees. During the examination process, a certificate of eligibility submitted by the VA decides whether the grant fee is waived or paid.
Veterans who use the refinancing option can pay the financing fee upfront, and the lender collects it after the loan is completed. Since the fee is likely to run into the thousands of dollars, most borrowers choose to finance it and repay the loan. They can also pay in cash or ask the seller to pay, but they typically have no choice between financing or repaying with a loan, the VA said.
Find the right Loan Officer
Buying a home with a VA loan is a time-consuming process for real estate and mortgage professionals. It gets even more complicated if they do not have extensive experience working with the VA.
Thankfully our Loan Officers are well versed in granting and refinancing VA loans. Working within Santa Clarita for over 25 years we’ve helped many veterans find the home of their dream, in as little as 25 days! Find out today why we’re the number 1 mortgage lender in the Santa Clarita and start our zero obligation application here.