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- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About VA Non Allowable Fees
If you are planning to buy a home through a mortgage, you would have to pay closing costs as part of your mortgage transaction.
As a buyer, you would always try to get a mortgage with the lowest closing cost. If you are a veteran or active member you are eligible to take a VA loan to purchase your dream home.
One of the biggest benefits of a VA loan is that it limits the fees the lender can charge you as your closing cost.
In this post, we will learn all about VA non-allowable fees and how you can keep your closing costs under control by using them.
What Are VA Non-Allowable Fees?
In simple words, the VA non-allowable fees are the fees that the lender cannot charge a borrower when they are getting a VA loan. VA loans are backed by the US Department of Veterans Affairs.
The VA home loan program strives to provide an affordable home-buying experience for veterans, so it’s no surprise that the VA controls the amount veterans will pay at the closing of a VA loan.
Non-allowable VA fees are fees that the VA prohibits lenders from charging borrowers during the closing process.
VA loan borrowers should not have any of the nonallowable VA items in their loan estimates. When you take out a home loan, the list of fees is huge, so it is very important to know what you should and shouldn’t allow for your loan.
What Are The Types Of Fees Included In VA Non-Allowable Fees?
The VA places restraints on VA mortgages to help make home ownership affordable for borrowers that are qualified.
Many VA loan fees are not allowed, which means that VA borrowers may not have to pay the fees that are commonly paid in conventional mortgages.
Here is a list of VA fees that a borrower cannot pay:
- Attorneys’ fees.
- Real estate agent commission.
- Prepayment penalties.
- Inspection fees are charged by HUD or FHA.
- An appraisal is ordered by a lender or broker to challenge a lower VA appraisal.
- Appraisals requested by parties other than the mortgage lender or VA borrower.
- Escrow fees to set up the escrow account.
- Rate lock fee to lock the rate.
What Are VA Allowable Fees?
Here is a list of VA loan fees you should know that the lender is allowed to charge:
- Funding Fee for VA loans: A one-time payment made directly to the VA to fund the VA loan program.
- VA Certification Fee: Fee for obtaining VA-certified appraisal for the property that you are planning to buy
- Credit report fee: Fee charged to get a copy of your credit report to verify your creditworthiness.
- Origination fee: A fee charged by the lender to cover their cost of funding which has to be less than 1%.
- Title Insurance: Fees for creating a new title document.
- Recording fee: Fee for the cost of transferring ownership.
- Buy-down points: You must pay the buy-down points used during the VA loan process to get a better rate.
Who Pays For The VA Non-Allowable Fees?
VA mortgages have strict requirements regarding how much the buyer can pay in fees. If the expense falls into the VA’s non-allowable fees category, someone else will need to cover those expenses. In some cases, the seller pays the VA loan fees.
In other places, the real estate agent or the lender may cover these costs. Keep in mind that if the seller pays VA non-allowable fees, these fees may be included in the contract in another way. A seller may add these costs to the home’s sales price to cover the difference.
Conclusion
Every situation is different when it comes to closing costs and fees associated with acquiring a VA loan.
VA nonallowable fees are on set to ensure affordable financing choices for borrowers eligible for VA loans to buy a home.
This makes the VA loan option one of the best options for VA loan borrowers by saving a good amount of money on their closing costs.
