If you’re a veteran or an active-duty service member looking to purchase a home, you may be wondering about the closing costs involved in the process. Closing costs can add up quickly and can impact your budget, which is why it’s essential to know who pays for them. In this article, we’ll dive into who pays for closing costs on a VA loan and what you need to know about the process.
If you would like to talk to a VA loan specialist about VA loan closing cost call us at (855) 956-4040.
What are VA Loan Closing Costs?
Closing costs are fees associated with the purchase of a home. These fees are paid at the closing of the transaction, which is the final step in the home buying process. Closing costs typically range from 2% to 5% of the purchase price of the home and can include:
- Appraisal fees
- Inspection fees
- Title search and insurance fees
- Origination fees
- Recording fees
- Prepaid taxes and insurance
- Attorney fees
- Transfer taxes
- Survey fees
- And more
Who Pays for Closing Costs on a VA Loan?
On a VA loan, both the buyer and seller can contribute to the closing costs. However, the VA has specific guidelines on what costs can be charged to the veteran and what costs must be paid by the seller.
The veteran can pay for the following costs:
- VA funding fee
- Credit report fee
- Appraisal fee
- Origination fee
- Recording fee
- Survey fee (if required by the lender)
The seller can pay for the following costs:
- Real estate commissions
- Loan closing costs
- Prepaid taxes and insurance
- VA funding fee
- Recording fee
- Any other fees considered reasonable and customary
It’s essential to note that the veteran cannot pay for any other fees not listed above. If the veteran agrees to pay for any additional fees, the loan will be considered non-conforming, and the veteran may be required to pay a higher interest rate.
How to Negotiate Closing Costs on a VA Loan
Negotiating closing costs on a VA loan can be challenging, but it’s not impossible. Here are some tips for negotiating closing costs:
- Shop around for lenders: Not all lenders charge the same fees. Shop around for lenders and compare their fees to get the best deal.
- Request a seller concession: You can ask the seller to pay for some or all of the closing costs. Sellers are more likely to agree to a concession if they are motivated to sell the property.
- Negotiate the interest rate: You can negotiate the interest rate on the loan, which can impact the amount of closing costs you pay.
- Request a no-closing-cost loan: Some lenders offer no-closing-cost loans, which means they will cover the closing costs in exchange for a higher interest rate.
If you have questions about VA loan closing costs or your VA home loan benefits give us a call at (855) 956-4040. We are here to answer any VA mortgage related questions that you might have.
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