Using your VA Loan benefit may seem daunting at first, but it’s important to understand as many aspects of this benefit as possible. One of the great things about the VA Loan is that it minimizes closing costs for the veteran. Non-allowable fees are one of the ways that this is done.
The VA Loan Non-Allowable Fees are fees that veteran borrowers cannot pay during the VA loan process. These fees can also be difficult to calculate due to the fluidity of the situation. Items that impact the fees are:
* What state the loan is originated in
* The specific lender’s fee structure
* The VA Loan Amount
VA Fees that cannot be charged by the lender ( when charged the 1% origination fee) are:
* Application fees
* Attorney Fees
* Home inspections ordered by the lender
* Home appraisals required by the lender
* Notary fees
* Real estate agent fees
* Property tax service
* Postage fees
* Mortgage rate lock fees
If you’re wondering why the lender is charging a 1% origination fee, this is why. The origination fee covers these items for the lender, but any non-allowable charges that go over that flat fee, the lender must take a hit on.
That being said, you may have heard of some lenders that do not charge the 1% origination fee, which may sound like a better deal. But, if the lender is not charging the origination fee, the list of non-allowable fees is significantly shorter:
* Attorney fee
* Mortgage broker fee
* Realtor commission
* Prepayment penalties
* Inspection fees from the builder (HUD/FHA)
The VA Loan advantage of minimal closing costs and zero down payment is awesome. But, you may find yourself worrying about paying closing costs. Don't fret--there are things you can do to help the situation. Even though you are not allowed to pay the non-allowable fees—your real estate agent, lender, or seller can pay them. The VA allows sellers to pay up to 4% of the purchase price in closing fees. So, if the purchase price is $300,000, the seller will be allowed to pay a maximum of $12,000 toward the buyer’s closing costs.
One rule of thumb that veterans and military members can use to calculate closing costs is to expect to pay 2-4% of the purchase price. By preparing for this number, you can be sure to adjust your budget and be ready when the time comes to purchase a home you love.
When using your VA Loan, you need a lender you can trust. That’s why ADPI has an in-house lending team to help you with your lending needs. ADPI’s AmNet branch offers unprecedented VA loan expertise and advice to get you started on your home buying journey. If you have questions about VA Non-allowable fees or any other VA Loan categories, don’t hesitate to reach out to our lending team here: https://www.activedutypassiveincome.com/real-estate-agents-and-lenders. Our outreach team will get you connected and get you the answers and help you need!