by LIna Martinez
The biggest component of conventional loan closing costs is the down payment. However, there is no down payment required in case of a VA loan. As a VA home loan buyer, you still have certain other costs to consider when your application gains a closure. The closing costs comprise of the fees and costs that are applicable when the loan has attained sanction.
These costs are applicable in almost all types of mortgages. However, the nature and amount of these costs are likely to vary from one mortgage type to another. In the case of VA mortgages, the general costs of mortgage are likely to be only 3 percent of the total value of the new home in the reckoning. This percentage may differ in the case of different homes and buyers.
Here, you’ll get to know a little more about the various closing costs attached to VA home loans. Read on to have a fair idea of these costs so that you may plan your outlay.
Loan Closing Costs Applicable to VA Loans
Some closing costs are specific to the VA loan type chosen by you. These costs will vary in line with the chosen program. Bruce Glassinger of VA Loan Lending explains that some VA loan closing costs are specific to the lender, while other costs will be the same no matter what lender you use. It’s important to have prior knowledge of the following costs:
VA Funding Fees
VA funding fee helps the guarantee of the VA. The fees are levied in the form of a percentage that’s added to the amount of mortgage. VA funding fees are obligatory and have to be paid by all home buyers having a VA loan. The entire cost of this fee is dependent on the buyer. First-time VA loan home buyers may get percentages as low as 1.25 percent of the total outlay of the VA loan. On the other hand, veterans using VA loans once again can expect a rate of 3.30% of the VA loan amount.
Discount Points
Discount points, which serve to be an option for all kinds of mortgages, are applicable as a percentage. This percentage can be clubbed with the entire cost of closing the VA loan. These discount points work towards a reduction of the mortgage rate applicable to their loan. The goal of the points relates to getting savings for the buyer in the long run by decreasing the overall monthly costs. However, as the discount points are high, almost all VS loan mongers tend to disregard it altogether.
Lender Fees
Along with the other fees, you will be charged smaller-sized fees by your lender at the time of closing the VA loan. The fees in question would depend on the type of home being purchased, the lender, the mortgage size, and so forth. You may want to know more about these fees by getting in touch with your preferred VA loan lender. Ask for all the costs at the beginning itself to avoid any surprises in the future.