VA Loan Articles
VA Loan Fees That Borrowers Should AnticipateHome buyers with experience applying for a VA mortgage know there are plenty of items they may have to pay for out-of-pocket or include in the amount of the VA loan (when allowed). First time home buyers don't have the benefit of that experience and are sometimes surprised by the fees they may have to pay.
Needless to say, the informed buyer is a prepared buyer and if you know about your responsibilities to pay the cost of assessments, credit reports, and flood zone determination for the VA loan you can start saving now or make plans to offset the cost when the time comes.
The little fees add up. You'll have to pay for a credit report, you may also need to pay for Federal Express next-day shipping and other incidentals. (That is often true for refinancing loans where the expense of Fed Ex means saving money on interest payments.) The borrower is also responsible for the costs associated with determining whether the home to be purchased with the VA home loan is in a flood zone or not. That said, a situation where a veteran is NOT required to pay is when flood zone determination is made by a Department of Veterans Affairs appraiser or the lender.
Did you know that as a VA borrower, you're required to pay a VA funding fee? You'll also be responsible for a one-time fee to register in the Mortgage Electronic Registration System or MERS. Another cost to save up for; "local variances"-some locations may have additional or specialized required expenses the veteran could be charged for, but Department of Veterans Affairs regulations require such fees be issued only with permission from the VA.
VA borrowers should also know they must not be charged additional fees by the lender for third-party services. For example-when a bank pays to obtain a credit report for a VA borrower, it may only pass on the actual cost of that report to the veteran. Lenders cannot charge additional fees on top of the cost of doing business with the third party. Your bank is permitted to charge a one percent "flat fee", which the Department of Veterans Affairs permits as a way for the lender to recoup the costs of doing business with the VA not otherwise reimbursable as itemized fees and expenses.
All of these costs should be anticipated, whether you want to inquire about building them into the amount of your VA home loan, or want to pay them up front. In some cases you may have no choice but to pay up front; make a budget for such expenses and you'll be fully prepared.