One of the most popular benefits afforded our veterans and qualifying service members is the VA home loan. Established in 1944 as part of the original GI Bill, this special loan program allows for buyers to obtain financing with no money down and reduced closing costs.
The VA home loan program limits the type of closing costs that a veteran can pay. For example, someone with a conventional mortgage might pay an attorney fee of $500 yet VA loan programs prohibit the veteran from paying an attorney fee at the closing table. An FHA borrower can expect to pay a lender charge for underwriting and processing an FHA loan of upwards to $800 or more. Yet the VA will not allow the veteran to pay underwriting or processing charges. That's a great deal, rightall
That depends upon your perspective. If you're the seller, it might mean less money for you when the deal closes.
Just because the VA prohibits certain fees the veteran may pay that doesn't mean those fees disappear. Far from it. It simply means somebody has to pay them and there are only three parties from the VA lender's perspective: the buyer, the seller and the lender.
In the past, when a seller discovered the buyer was using a VA home loan to buy their property the seller might turn down the offer or increase the sales price. Why? The seller didn't want to pay the additional closing costs associated with a VA home loan. However today, there is simply more flexibility.
As a seller who receives a VA loan offer, treat it like any other without regards to who pays for certain closing costs or adjusting the sales price. Instead, let the closing costs be something the lender and the borrower work out on their own; you're not a part of the transaction. If a sales contract does ask that the seller pay for certain closing costs, treat the offer as you would any other... either accept the contract or don't.
Recent changes in VA guidelines allow for more flexibility for lenders to pay for closing costs on behalf of the borrower. There are avenues to have certain prohibited charges paid for that do not require any participation from the seller.
The VA home loan program limits the type of closing costs that a veteran can pay. For example, someone with a conventional mortgage might pay an attorney fee of $500 yet VA loan programs prohibit the veteran from paying an attorney fee at the closing table. An FHA borrower can expect to pay a lender charge for underwriting and processing an FHA loan of upwards to $800 or more. Yet the VA will not allow the veteran to pay underwriting or processing charges. That's a great deal, rightall
That depends upon your perspective. If you're the seller, it might mean less money for you when the deal closes.
Just because the VA prohibits certain fees the veteran may pay that doesn't mean those fees disappear. Far from it. It simply means somebody has to pay them and there are only three parties from the VA lender's perspective: the buyer, the seller and the lender.
In the past, when a seller discovered the buyer was using a VA home loan to buy their property the seller might turn down the offer or increase the sales price. Why? The seller didn't want to pay the additional closing costs associated with a VA home loan. However today, there is simply more flexibility.
As a seller who receives a VA loan offer, treat it like any other without regards to who pays for certain closing costs or adjusting the sales price. Instead, let the closing costs be something the lender and the borrower work out on their own; you're not a part of the transaction. If a sales contract does ask that the seller pay for certain closing costs, treat the offer as you would any other... either accept the contract or don't.
Recent changes in VA guidelines allow for more flexibility for lenders to pay for closing costs on behalf of the borrower. There are avenues to have certain prohibited charges paid for that do not require any participation from the seller.
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