VA Loan Closing Costs: An Added Benefit
Besides the advantage of requiring no down payment for qualified VA borrowers, there’s also a distinct advantage for the borrower regarding closing costs. The veteran is limited to the types of closing costs that may be paid, helping the veteran save money at the closing table. But if there are costs associated with a VA mortgage and the veteran isn’t allowed to pay for them, who does?
The Types
A common way to remember which costs a veteran is allowed to pay for is to remember the acronym ACTORS. That stands for:
- A Appraisal
- C Credit Report
- T Title Insurance
- Origination Fee
- R Recording Fee
- S Survey
These are common charges found on most every VA mortgage and while they can vary a bit by amount; these fees are the ones that can be paid for by the veteran. But what about these charges?
- Attorney
- Underwriting
- Escrow
- Processing
- Document
- Tax Service
These fees, and others, are example of charges that the veteran is not allowed to pay. Even though the VA lender requires a processing and an underwriting fee in order to approve the VA loan, the veteran may not pay for these charges and any other fee deemed “non-allowable.” So if the veteran can’t pay them, who does?
The Seller Can
Non-allowed closing costs can be paid by the seller of the property and is typically the initial method of dealing with such charges. As part of a sales contract, the buyer can say, “We’ll pay you $200,000 for this home as long as you pay for $3,000 in closing costs.”
