Closing Costs With A VA LOAN

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Are you going to buy a home using your VA loan benefit but aren’t sure what you’ll need to pay in closing costs? In this episode of Hella Smart, I’m going to break down the fees you’ll need to pay as part of your home purchase. We’ll discover why it’s a hella smart move to find out what your fees are going to be before you go home shopping using your VA loan benefit.

Before You Begin Your Search

When you’re buying a home with your VA loan benefit, the loan itself is not free. Because there are costs associated with getting your home, you’ll want to know what these fees are going to be. This way, you can be best prepared ahead of time as a homebuyer. 

The only upfront cost you may need to pay before you find a home to buy is your credit report. This is an outside hard cost that the lender has to pay. Other than that, you shouldn’t be paying anything out of pocket before you find a home. 

Additionally, you also want to make sure that you’re fully pre-approved and know who your lender is going to be. This is important because when you find the right home for you, that’s the last thing you need to worry about. 

The VA Home Loan Appraisal

Once you find the home you want to buy and your offer is accepted by the seller, you then need to start the process of getting your loan fully approved. The first out-of-pocket cost you’ll usually pay at that point is the VA home loan appraisal.

The VA sends an independent third party out to the home you want to buy to inspect it. This will ensure that it’s not overvalued for the home market you’re buying in. This involves an upfront cost that you may need to pay as part of the loan. 

You can find the cost that the VA sets for the appraiser for your county and your state by clicking here.

Inspections

The next upfront cost when using your VA loan benefit is the VA wood-destroying insect and infestation inspection. This involves a local inspector going to the home and finding out if there is any kind of infestation or infection in the property that’s causing damage to the property. 

They’ll also check to see if there is existing damage that’s been caused by some type of insects or infestation in the past. Your VA loan underwriter will see this report and let you know what repairs—if any—need to be made before using your VA loan benefit. 

Lender Fees And Loan Requirements

The next set of fees you may need to pay is what’s called lender fees. These are are fees that you pay directly to the loan officer’s company. Those can be things like loan origination fees, loan underwriting fees, possibly loan processing fees, and anything else a lender may charge you. 

Again, this is the money going to the lender that they may charge for your loan. You’ll want to talk to your loan officer to find out what fees their company charges. The next set of fees are required for your loan but are not paid to the lender; rather, they’re paid to an outside party. 

These fees can be things like the VA appraisal, loan processing, Homeowner’s Association fees, tax certification fees, credit reports, flood cert checks (to see if your home is in a flood area), and more. Each of these costs is required as part of your loan, but they’re paid to a party other than the lender. Again, check with your loan officer to see which ones apply in your case. 

Insurance, Taxes, And More

The next set of fees is required for your loan, though you get to pick who’s going to provide them. These are things like lender’s title insurance and owner’s title insurance, which protect your interest in the case of a property title dispute. You may also possibly need to pay closing attorney fees if you’re in one of the states that require it.

Other costs include notary public fees to notarize your documents and doc preps. Again, you get to pick who’s going to provide these services, although they are required by the lender. The next set of fees is government fees that are paid as part of buying a home. These would apply even if you’re buying a home without a home loan and includes things like county and city transfer taxes, property taxes that are still due for the property, or property taxes that may have already been paid for this part of the year by the current owner.

Additionally, you may need to pay things like sewer transfer lateral fees, school assessments, park assessments, and anything that’s paid to the city, county, and sometimes state in the area where you’re going to buy. Check with your loan officer and either your escrow officer or closing attorney, depending on your state, to check on what kind of fees you’ll need to pay. 

Prepaid Expenses

The next set of fees and costs are what are called prepaid expenses. These are actually costs that are you pay as part of owning the home which your lender may need you to pay ahead of time. Usually, you’re paying one year of homeowner’s insurance to protect both you and the lender’s interest, if anything were to happen to the home that the first year.

You’ll also probably be paying into what’s called an impound account. That’s where you’re pre-paying a certain amount of your property tax and your homeowner’s insurance. This is so that, when the next bill is due, that impound account has enough money to pay your bills. 

The last group of fees you may need to pay are things that may be specific for the area or the home that you’re buying. This includes things like Homeowner’s Association fees, Mello Roos fees in some areas, and home warranties. If you’re buying something like that, you again want to check with your loan officer and your real estate agent to find out which of these fees you’ll be paying as part of your closing with a VA home loan. 

Getting Into Your Dream Home

I hope this video helps you understand which fees or closing costs you may need to pay when you’re using your VA home loan benefit. If you’re buying a home and you want to be hella prepared to use your VA home loan benefit, feel free to reach out to me and I’ll be happy to help.

You can also subscribe to my channel so you never miss an episode of Hella Smart, my show all about mortgages and real estate. Stay tuned to see what I feature next!

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Getting A VA Home Loan: Davetta Thibeaux’s Story

Are you a veteran that’s looking to buy or sell a home and need some help? In this episode of Hella Smart, we’re going to hear from Davetta Thibeaux, a United States Army veteran that I recently helped qualify for a loan. We’ll learn about her experience and see how she was able to transition to a new home.

Davetta’s Story

Davetta needed to sell an existing home and buy a new one. Because she’s a veteran, I helped her get the necessary documents she needed to qualify for a VA home loan. As Davetta tells it, I was instrumental in also getting her VA home certificate eligibility.

For Davetta to buy the lovely home that she now resides in with her daughter and great-granddaughter here in Oakland, she first had to sell her old home. Working hard to be efficient, I prepared the loan and had it ready to go in just 17 days. To Davetta, this was really miraculous and made the qualifying process go as smooth as silk.

Because I’m very knowledgeable about the entire VA home loan process, I was able to answer whatever questions or concerns Davetta had. I was always available to provide information to make the process pressure-free.

I’m Here To Help

Davetta expressed her gratitude, and I was also grateful to receive her high recommendation. She gave me five stars for the painless process, and I was more than happy to help.

So if you’re a veteran that’s interested in purchasing a home here in the San Francisco, Oakland, or Greater Bay Area, feel free to reach out to me and I’ll be glad to connect. Before you know it, you’ll be pre-qualified and into whatever home that you’re interested in purchasing.

Don’t forget to subscribe to my channel so you never miss an episode of Hella Smart. Stay tuned to see what I feature next!

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The Pros And Cons Of Using A VA Home Loan

Are you thinking of buying a home and wonder if using a VA home loan is the right choice for you? In this episode of Hella Smart, I’m going to give you the pros and cons of using a VA home loan. We’ll examine everything from down payments to inspections so you can make the right choice with your home financing.

If you’re eligible to use a VA home loan, that means that you’re a service member, a veteran, or the spouse of a deceased service member or veteran. So first, I want to thank you for your service. Getting a VA home loan is great, but it’s important that you understand everything about it and how it works before you go shopping for your home.

The Pros Of Using A VA Home Loan

Let’s examine three reasons why using a VA home loan is a hella smart option. The first and biggest pro is that the VA home loan doesn’t require a big downpayment to use it. In fact, it doesn’t require a downpayment at all. This is not like some kind of homebuyer grant or downpayment assistance program you may have heard of, where you have to pay back a part of the loan or the grant when you sell or refinance the home. None of that applies here; this is a true zero downpayment loan option that you’ve earned with your military service.

The second pro for using a VA home loan is that this program is more forgiving for homebuyers with lower credit scores, higher debt to income numbers, and less money in the bank when they’re buying their home. I’ve seen homebuyers who were not able to buy a home using a conventional loan or an FHA loan program successfully buy a home using the VA home loan benefit. This is not like other government programs that you may have heard of, with FHA being the most common. This gives veterans an advantage when trying to buy a home using their VA home loan benefit.

The third pro for using a VA home loan is that it doesn’t have any monthly mortgage insurance payments. Lots of low downpayment or no downpayment loan programs require the homebuyer to pay a monthly mortgage insurance payment for being able to use a low or zero downpayment loan. The VA loan program does not work like that. While it does involve something called VA loan insurance, that doesn’t involve monthly payments—which make it harder for you to qualify to buy a home

The Cons Of Using A VA Home Loan

Of course, not everything’s perfect. If you’re serious about buying a home, it’s important you know the cons of using a VA Home loan. The first con is that a VA home loan may have higher total loan costs compared to other loan options. The reason for that is the VA funding fee. This is a fee that the VA charges on VA Home Loans to pay for VA Mortgage Insurance. This insurance financially protects home loan companies if the veteran defaults or stops paying on their VA home loan.

The benefit of the insurance is that it’s what allows home lenders to make these loans with generally lower interest rates and more forgiving financial requirements compared to other home loan programs. It’s also important to remember that this fee is not charged to veterans with a 10% or higher disability rating. So if you’re a veteran with a VA disability rating of 10% or higher, you are exempt from paying this fee—making the VA home loan likely the best option for you.

However, if you have high FICO credit scores and a large down payment, the VA loan may be a more expensive option for you overall than other types of loan programs. Let me give you an example. I worked with Marcus and Linda when they bought their first home. Marcus is a Marine veteran and was eligible to use his VA home loan benefit. However, they also both had very high FICO credit scores and a large down payment. For them, using a conventional home loan option with no mortgage insurance was actually cheaper overall than using a VA home loan. This means we need to look at your whole financial picture to find out which is the best home loan option for you.

Stigma And Inspections

The second con to using a VA home loan is—and I really hate to have to say this—that there is some stigma to using the VA home loan program. It’s important to have a loan officer who can help explain the benefits of this program to sellers and their real estate agents so they understand that you’re a strong homebuyer. Be sure your loan officer is trained on the VA home loan program and has a good team behind them. You don’t want to get stuck working with some boot loan officer or a Blue Falcon who’s going to make a rookie mistake on your home purchase.

The third con you may need to deal with is the VA termite report and pest inspection. This only applies in some states, and sometimes it only applies to some counties in some states. However, you need to find out if this is something you need to deal with because it is a difference between VA home loans and other types of loans.

This pest report inspection is for certain areas where the VA wants to make sure the home you’re buying doesn’t have any termite or pest problems, as that would affect your ability to safely live in the home. Compared to other loan programs that don’t require them, this can be a con if you’re competing with other buyers who are using loans that don’t require this.

Buying Your New Home

I hope this helped you understand the pros and cons of using the VA home loan program to purchase your house. If you have any questions about how this works, please reach out and ask. I’d be happy to help walk you through your options.

For more VA home loan information, you can also subscribe to my channel so you never miss an episode of Hella Smart. Stay tuned to see what I feature next!

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