VA home loans are available to active military and veterans. They are possibly the best loans available today because they offer 4 major benefits. 100% financing with no down is payment required

VA loans do NOT have monthly mortgage insurance, unlike FHA loans, or conventional loans with less than 20% down. There are closing costs involved with buying a house using a VA home loan even though VA loans offer 100% financing. Closing costs are in addition to the down payment and can

Although VA loans offer 100% financing, there are still costs involved with buying a house with a VA loan. These costs are known as closing costs and are different from the down payment. Closing costs on a VA loan can range from 2-4% of the purchase price. VA allows the seller to pay up to 4% of the VA buyers closing costs. Therefore it is a good idea to ask the seller to credit you for at least 3% of your closing costs when you make an offer on a house. This can dramatically reduce the out-of-pocket expenses for the buyer.

There are 3 major upfront costs required when buying a house with a VA loan; the earnest money deposit, home inspection fee and appraisal fee. When you make an offer to buy a home, it is customary to put up an earnest money deposit ranging from 1-3 % of the purchase price. This offer will show the seller you are serious. These deposit funds will be held with an escrow company after your offer is accepted. If you negotiate for the seller to pay all of your closing costs, you will get this money refunded when you close on the house.

Although VA loans offer 100% financing, there are still costs involved with buying a house with a VA loan. These costs outside of the down payment are known as closing costs. Closing costs on a VA loan can range from 2-4% of the purchase price. VA allows the seller to pay up to 4% of the VA buyers closing costs. Therefore it is very smart when you make an offer to buy a property to ask the seller to credit you for at least 3% of your closing costs. This can dramatically reduce the out-of-pocket expenses to the VA home buyer to get into a home.

The buyer will have to pay for a home inspection. Though optional for a VA buyer, it is highly recommended to have a home inspection. As an independent 3rd party the inspector will inspect all aspects of the house such as the structure, electrical, plumbing and more. It is so that you know you are making a sound investment. Home inspections generally run about $300. This has to be paid up front by the buyer.

You will have to pay the appraisal. When you purchase a property, the lender will require an appraisal on the property. A VA appraisal currently costs $400.

The third cost is a VA appraisal. These run about $400 and are required by the lender. The appraiser will appraise the property and make sure the property is not less than the loan amount.

Title and Escrow Fees When you “close” your house, it will be handled by an escrow company. They will have a variety of fees to handle closing such as an escrow fee, and notary public fee. These fees will have to be included in the credit that you ask for from the seller and can amount to over $1,000 on average. When you buy a house you will be required to obtain title insurance. There are 2 title policies you must have, an owners and lenders policy. The seller will typically pay for the owners policy and the buyer will pay for the lenders policy. The cost of title insurance depends on cost of the property. For a $300,000 house the fee will probably be around $400.

Title and Escrow Fees When you “close” your house, it will be handled by an escrow company. They will have a variety of fees to handle closing such as an escrow fee, and notary public fee. These fees will have to be included in the credit that you ask for from the seller and can amount to over $1,000 on average. When you buy a house you will be required to obtain title insurance. There are 2 title policies you must have, an owners and lenders policy. The seller will typically pay for the owners policy and the buyer will pay for the lenders policy. The cost of title insurance depends on cost of the property. For a $300,000 house the fee will probably be around $400.

When you get a VA home loan, you will have to pay the interest on the loan from the day you close until the end of the month. So for example if you closed on your new home May 5th, you would owe interest on the loan from May 5th to May 31st. This is called pre-paid interest and is part of your closing costs. But then your first payment would not be until July 1st. So you essentially get to skip the June payment even though you move in the house May 5th. The reason for this is because mortgage payments are made in arrears or behind . You made your May payment as part of your closing costs, and you wont make your June payment until July 1st. It can be advantageous to time your closing at the end of the month, so you limit the pre-paid interest and reduce your overall closing costs.

When you obtain a VA home loan, you will have to pay the interest on the loan from the day you close until the end of the month. So for example if you closed on your new home January 10th, you would owe interest on the loan from January 10th to January 31st. This is called pre-paid interest and is part of your closing costs. But then your first payment would not be until March 1st. So you essentially get to skip the February payment even though you move in the house January 10th. The reason for this is because mortgage payments are made in arrears. You made your January payment as part of your closing costs, and you wont make your February payment until March 1st. It is a smart idea to time your closing at the end of the month, so you limit the pre-paid interest and reduce your overall closing cost

The VA lender will require you to pay an entire 12 month homeowners insurance policy in advance. To insure against fire and other disasters, all lenders require that you keep a homeowners policy on a property. Paying 12 months in homeowners insurance up front can total between $400 to $1,000 or more. Please call your insurance agent for a quote. The cost will depend on where your property is located and the purchase price

A requirement from the VA lender is that you to pay an entire 12 months of homeowners insurance policy in advance. All lenders require that you keep a homeowners policy on a property if there is a mortgage on it. This will insure against fire and other disasters that could damage your house. Paying 12 months in homeowners insurance up front can total anywhere from $400 to $1,000 or more. Call your insurance agent for a quote as the cost will depend on where your property is located and the purchase price.

These are the major closing costs associated with buying a home with a VA loan. As mentioned, total closing costs can range from 2-4% of the property purchase price which can be a fairly large number.

In summary, these are the major closing costs associated with buying a home with a VA loan. As mentioned, total closing costs can range from 2-4% of the property purchase price. That can be a fairly large number. So it is very important to either plan to have money set aside for these costs or work with the real estate agent representing you to negotiate with the seller to pay for your closing costs.

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