Veterans protected by VA regulated closing cost
The cost of obtaining any mortgage can be quite a lot. VA protects Veterans and regulates those closing costs that a veteran may be charged in connection with closing a VA loan. The veteran may pay reasonable and customary amounts for any of the following items:
(1) Fee of VA appraiser and of compliance inspectors designated by VA. The veteran may pay for a second appraisal if he or she is requesting reconsideration of value.
(2) Recording fees and recording taxes or other charges incident to recordation.
(3) Credit report.
(4) That portion of taxes, assessments and similar items for the current year chargeable to the borrower and the initial deposit (lump-sum payment) for the tax and insurance account.
(5) Hazard insurance
(6) Survey, if required by lender or veteran.
(7) Title examination and title insurance.
(8) Federal Express, Express Mail, or a similar service when the saved per diem interest cost to the veteran will exceed the cost of the special handling.
(9) VA Funding Fee
A lender may charge and the veteran may pay a flat charge not exceeding 1 percent of the amount of the loan, provided that the flat charge is in lieu of all other charges relating to costs of origination not expressly specified and allowed in this schedule. Costs covered by the 1-percent flat charge include the following:
(1) Lender's appraisals.
(2) Lender's inspections, except in construction loan cases.
(3) Loan closing or settlement fees.
(4) Preparing loan papers or conveyancing fees.
(5) Attorney's services other than for title work.
(7) Postage and other mailing charges, stationery, telephone calls, and other overhead.
(8) Amortization schedules, pass books, and membership or entrance fees.
(9) Escrow fees or charges.
(10) Notary fees.
(11) Commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser.
(12) Trustee's fees or charges.
(13) Loan application or processing fees.
(14) Fees for preparation of truth-in-lending disclosure statement.
(15) Fees charged by loan brokers, finders or other third parties whether affiliated with the mortgagee or not.
(16) Tax service fees.
VA FUNDING FEE REQUIREMENT
The law requires that VA be paid a funding fee with guaranteed loans. The only exceptions are loans made to veterans receiving VA compensation for service-connected disabilities, or who, but for receipt of retirement pay, would be entitled to receive compensation, and loans made to surviving spouses of veterans who died in service or from service-connected disabilities.
Basic Funding Fees - First-time Use. The funding fees for veterans who have not previously obtained a VA loan and whose loan eligibility is not derived from 6 years of service in the Selected Reserve are:
(1) 2.0 percent of the loan amount for loans with downpayments of less than 5 percent.
(2) 1.5 percent of the loan amount for loans with at least a 5 percent downpayment.
(3) 1.25 percent of the loan amount for loans with at least a 10 percent downpayment.
Funding Fee for Reservists - First-time Use. These veterans will pay the following funding fees:
(1) 2.75 percent of the loan amount for loans with downpayments of less than 5 percent.
(2) 2.25 percent of the loan amount for loans with at least a 5 percent downpayment.
(3) 2.0 percent of the loan amount for loans with at least a 10 percent downpayment.
Funding Fees for Subsequent Use. Except for interest rate reduction refinancing loans, veterans (including those whose eligibility is derived from service in the Reserves/National Guard) using the loan program for the second and subsequent times will pay increased funding fees.
The fees for subsequent use are:
(1) 3.0 percent of the loan amount for loans with downpayments of less than 5 percent.
(2) 1.5 percent of the loan amount (2.25 percent for Reserves/National Guard) for loans with at least a 5 percent downpayment.
(3) 1.25 percent of the loan amount (2.0 percent for Reserves/National Guard) for loans with at least a 10 percent downpayment.
The downpayment is computed on the property sales price. When a sales price is above the reasonable value of the property, as determined by VA, the portion of the downpayment attributable to reducing the loan amount to reasonable value may be used to calculate the fee. In cases involving partial entitlement, the downpayment required to permit sale of the loan in the secondary market also counts toward the 5- or 10-percent downpayment for funding fee calculation.