If you a Veteran who wants to purchase a Foreclosure or Short Sale, be prepared that very few of the Banks will pay closing costs. Because of this, we often have Veteran’s who want to know if they can “roll in their VA Loan closing costs” – meaning add it to their mortgage loan, as an addition.
This is understandable, since VA Loan Closing Costs and prepaid items (like taxes and insurance) can cost upwards of $8000 to $10,000 depending on the sales price and what time of year you close.
Many of the homebuyers we talk to in NC are ready to pay SOME of the closing costs, but not anywhere near $10,000. VA Loans are 100% no money down mortgage loan, so often times the Veterans we work with don’t need more than a $1000 or so to cover their portion of the costs… because Seller’s will often pay the closing cost.
The difference is with Foreclosures and Short Sales – where an already losing bank is involved in the transaction. That’s where the question comes about rolling in closing costs on a VA loan.
Despite the obvious misconception, Closing Costs on a VA loan can NOT be financed. The VA allows for the seller or lender can pay the closing costs but they certainly can not be financed on a purchase transaction. Only the funding fee can be financed.
If WE pay them for you, as the lender, it will be in exchange for you having a slightly higher than “market” interest rate. If the seller pays, it will be in exchange for a sales price that might be higher than he would have agreed upon.
Because all mortgage loans that are backed by the Government have the “best” interest rates right now, this is a GREAT program to use! In addition, there’s no monthly PMI! Even if you are purchasing a “Bigger” home, and you are going to make a downpayment, you might still want to use this program!
If you are considering a VA Loans in Rural Communities, and want to know more about qualifying for a VA mortgage loan, please call Steve and Eleanor Thorne, Govenment Mortgage Loan Experts, 919-649-5058