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 home buyers 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 down payment, 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, or you have more questions about Closing Costs on A VA Loan – please call Steve and Eleanor Thorne, Government Mortgage Loan Experts, 919-649-5058
We bought a house in mountain home idaho on my husbands V A loan and the house was a forclosure so we had to pay all the closing costs but they were put in our loan,we put nothing down. My question is we want to sell and this is a military town, my realtor says we must pay all the closing cost that the closing costs can’t be rolled into the loan, but we did it. So why can’t another person do it.
My suspicion is that you were purchasing a foreclosure property and it was added to the sales price. Let’s say the home was for sale at $100k, and the closing costs were $5K. So you likely took a sales price of $105 and the Seller (the bank) paid the $5k from those additional funds.