Buying a home using your VA home loan benefits can make homeownership affordable, especially if you don't have a large down payment or an excellent credit score. Of course, like any loan product, you need to make sure you understand the terms and conditions of the loan, as well as your responsibilities when it comes to closing. The following can help some of the questions you likely have about VA loan closing costs.
What are closing costs?
If you have never purchased a home before, you may be unclear on what closing costs are exactly. The term "closing costs" is a catch-all phrase to describe the collection of fees that are assessed when a property transfers ownership. This can include loan origination fees, appraisal and tax fees, the costs of recording the deed or performing the title search, and various other sundry items. There is no fixed amount for these fees, but they generally amount to about 2 to 5 percent of the final purchase cost of your home. VA loans are not exempt from closing costs.
Who pays the closing costs?
While most of the fees that are collected under the closing cost umbrella are not negotiable, who pays the cost is up for debate. Determining who pays what percentage of the cost is something that can be discussed when you are negotiating the cost of the house. Generally, in a healthy market, the buyer pays the costs associated with their end of the deal, and the seller covers the costs for their side. In a buyer's market, you may be able to negotiate so the seller pays all or some of the closing, while the opposite is true in a seller's market. In some cases, if there are repairs that need to be made to the home that the seller is unable or unwilling to cover, you may be able to get them to cover closing in lieu of those repairs.
What if you can't cover closing costs?
If the closing costs are out of your budget, you may still be able to get a VA loan. Unlike some consumer loans that don't allow anyone but the buyer to cover their full share of closing costs, VA loans do allow the seller to cover the buyer's full share of costs. You can also request and receive lender credits from your loan originator to cover your share of the closing costs. Further, there are limits to the type and amount of closing costs you can be assessed when you are financing with a VA loan.
Contact services such as VA Loan Lending for more information.
Share8 July 2019
A few years back, I really started thinking about my financial future. I thought long and hard about how to go about handling various things, and someone told me that I needed to do something to get out of the hole. I started thinking about how to manage my money a little better, but I knew that I needed to start by getting a loan. I found a really fantastic loan that would work for what I needed, and after I got it, I felt great about the terms. After using it to pay off some of my debts, my monthly payments were much more manageable. Find out more about loans on this website.