The absolute first thing you must do in order to get a VA-Backed Loan is to obtain your Certificate of Eligibility (COE)
Two links to help you are:
- Online at the eBenefits portal at http://www.benefits.va.gov/homeloans/elig_center.as
2. Here is the expanded 2nd list of how to determine if you are eligible and detailed list of what you will need to apply for the COE http://www.benefits.va.gov/homeloans/eligibility.asp#A1
Both links are found at the United States Department of Veterans Affairs website http://www.benefits.va.gov/homeloans/elig2.asp
The best site I found for information, questions and answers is: http://www.valoans.com/va_facts_closing.cfm
VA Loan Guidelines ~ VA Loan Closing Costs
The veteran can pay a maximum of all reasonable and customary amounts for any and all of the “Itemized Fees and Charges” designated by VA as defined below plus a 1% flat charge by the lender plus reasonable discount points. Some special provisions apply to construction, alteration, improvement and repair loans.
HOW TO HAVE MINIMAL TO NO CLOSING COSTS
Please note that often times veterans believe that closing costs are covered by a VA mortgage. While that is not technically true, the same effect can be reached through careful structuring of your real estate contract. The loan amount will be the purchase price or appraised value, whichever is less (plus the VA Funding Fee). So if you want your closing costs covered by the loan, you need to increase the price and have a stipulation with the seller will pay the closings costs and pre-paid expenses equal to the amount by which you have increased the price. As long as the home appraises for the increased price, you will have the closing costs paid as part of the deal. Closing costs and pre-paid expenses can vary widely with 3% – 5% as the range for most places. If you want a more specific number in this regard after you have started looking for properties, we can provide you with a Good Faith Estimate for a particular property that you have an interest.
The VA defines allowable fees and charges that the veteran borrower can pay or closing costs that may be charged to the borrower. These costs are determined as reasonable and customary by each local VA office. All other costs in the transaction are considered non-allowable and generally paid by the seller when purchasing a new home or by the lender when refinancing your current VA mortgage. Itemized fees and charges are as follows:
APPRAISAL AND COMPLIANCE INSPECTIONS
The veteran can pay the fee of a VA Appraiser and VA compliance inspectors. The veteran can also pay for a second appraisal if they are requesting a reconsideration of value. The veteran cannot pay for a second appraisal if the lender or seller is requesting a reconsideration of value or if parties other than the veteran or lender request the appraisal.
RECORDING FEES
The veteran can pay for recording fees and recording taxes or other charges incident to recordation.
CREDIT REPORT
The veteran can pay for the credit report obtained by the lender.
PREPAID ITEMS
The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account.
HAZARD INSURANCE
The veteran can pay for the hazard insurance premium. This includes flood insurance, if required.
FLOOD ZONE DETERMINATION
The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination.
SURVEY
The veteran can pay a charge for a survey, if required by the lender.
TITLE EXAMINATION AND TITLE INSURANCE
The veteran may pay a fee for title examination and title insurance, if any. If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.
SPECIAL MAILING FEES FOR REFINANCING LOANS
For refinancing loans only, the veteran can pay charges for Express Mail or a similar service when the saved per diem interest cost to the veteran will exceed the cost of the special handling.
VA FUNDING FEE
Unless exempt from the fee (10% minimum disability from the VA), each veteran must pay a funding fee to VA.
OTHER FEES AUTHORIZED BY THE VA
Additional fees attributable to local variances may be charged to the veteran only if specifically authorized by VA. The lender may request VA to approve such a fee if it is, (a) normally paid by the borrower in a particular jurisdiction, and (b)considered reasonable and customary in the jurisdiction.
The following list provides examples of items that CANNOT be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat 1% fee.
Loan closing or settlement fees, document preparation fees, preparing loan papers or conveyance fees, attorneys services other than for title work, photographs, interest rate lock – in fees, postage and other mailing charges, stationery, telephone calls and other overhead, amortization schedules, pass books, and membership or entrance fees, escrow fees or charges, notary fees, preparation and assignment of mortgage to other secondary market purchasers, trustee’s fees or charges, loan application or processing fees, fees for preparation of truth-in-lending disclosure statement, fees charges by loan brokers, finders or other third parties, and tax service fees.
When reviewing allowable borrower fees and charges, many of the items can be paid for by the seller of the home and can be negotiable when presenting an offer on a home to the seller. Please consult with your Real Estate Professional handling the transaction.
Although all of this information will help you, the BEST place to get the bottom line is to contact your Lender and make sure they are versed in the current VA requirements and they can help you through the maze of paperwork, rules and help to make the process easier. That is what they are trained to do. Be sure to ask them what the length of time required to get the loan approved and funded is so that you can let your REALTOR® also know these time frames to help you stay in contract once you find your home.
If you need a referral to a GREAT Lender, let me know. I will be glad to help you find just the right one!
Dawn (Donna) O’Neal
408-221-0575 & 408-826-9193
Broker/Owner REALTOR®
Realty World Executive Advantage
Real Estate Broker License #01101500
GRI®, CRS®, LTG®, RRC®, PMN®, ASP®, e-PRO®, SRES®, CIPS®, TRC®,SFR®, CHS®, CDPE®, Platinum Equator Certified
SHORT SALE CERTIFICATIONS – HELP With The UTMOST DISCRETION!
www.Delinquent-Mortgage-Options.com
(408) 923-7758 www.DawnOneal.com
Exceeding Expectations ~ ALWAYS! TM
A REALTOR® is a real estate professional who is a member of the National Association of REALTORS®
Related articles
- Veteran Guide to Buying a New Home MilitaryVALoan.com (militaryvaloan.com)
- The History Behind VA Guaranteed Home Loans (veteranstoday.com)
Dawn O'Neal - Experienced Washington & California REALTOR® 