When we talk to folks about buying a house, one of the first questions we get asked about is how much is it going to cost – meaning how much cash do we need? Well, with a VA Loan, you don’t have to have a down payment (if you are borrowing less than $417,00) so, that leaves closing costs. Often times, a Seller will pay for closings costs – but there are some restrictions on what a Seller can pay – and what a Veteran can pay, especially when it comes to Appraisal Fees.
The Department of Veterans Affairs publishes rules governing what fees a veteran borrower is allowed to pay and what fees must be paid by a seller or a lender. Most of the underwriting guidelines governing who pays for the Veteran Home Loan Appriasal, for instance, involve what’s fair.
The Veteran loan applicants can’t be charged twice for the same expense. They must not be charged more than the actual expense for services rendered in cases such as appraisals or compliance inspections. Seems pretty straight forward, but you should understand that many Banks currently look at “Appraisals” as an “Income” department for the Bank – so VA is pretty well looking out for the Veteran when they establish these guidelines.
Reviewing the rules for these fees, you’ll discover the following: “The veteran can pay the fee of a VA appraiser and VA compliance inspectors.” Compliance Inspectors are usually called upon in the case of a new construction home that is being built during the loan process.
The VA Loan Underwriting Guidelines also state that:
• The veteran can also pay for a second appraisal if he or she is requesting reconsideration of value.
• The veteran cannot pay for an appraisal requested by the lender or seller for reconsideration of value.
• The veteran cannot pay for appraisals requested by parties other than the veteran or lender.
The last two items in that list are important to remember–there’s a difference between being required to pay the fee for a mandatory part of the VA home loan process–the appraisal and/or compliance inspection–and an optional part of the process requested by someone other than the borrower. So if the SELLER, for instance, is asking for a second appraisal… that would be on the SELLER to pay for.
The Veteran Home Loan borrower IS required to pay for the costs of the lender pulling credit reports, which are required as part of the loan approval process. The borrower cannot be charged MORE than the actual cost incurred as a result of requesting those credit reports.
In situations where an evaluation is required instead of a full credit report, the VA loan rules state, “For Automated Underwriting cases, the veteran may pay the evaluation fee of $50 in lieu of the charge for a credit report.”
Sometimes a flood zone determination is required as part of VA loan approval. Veteran Home Loan Guidelines , “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. The veteran can pay a charge for a life-of-the-loan flood determination service purchased at the time of loan origination.”
But the borrower cannot be charged for flood zone determination when that determination has been made by the lender or a VA fee appraiser.
The Veteran Home Loan Program is setting all of these guidelines in place to “cover” the Veteran. Some mortgage offices don’t do many VA Loans – and they might not know what closing costs the Veteran can pay, what Closing Costs the Seller must pay with a VA Home Loan and what the VA Guidelines are. If you are in NC, and looking for a VA Mortgage Loan, call us! We’ll be glad to help you, we have today’s lowest mortgage rates, and we love Veteran Home Loans! Thanks for your Service! Steve and Eleanor Thorne 919 649 5058