I'm not a realtor or a lender, but recently purchased our first home using a VA loan. It seems like many people have negative feelings about VA loans. So, I want to share our experience, which was great!
We purchased our home in 2007 using a VA Loan. We're recently out of grad school and didn't have much cash to put down (we could have put down 10 percent, maximum, although our credit scores are income are pretty high), but we did 100 percent financing. We also got the seller to pay all closing costs. We purchased when interest rates were higher, but shopped around and got a rate of 6.75 percent (this was pretty good at the time, though now it sounds outrageous).
We didn't have to pay a VA funding fee due to a service-connected disability, which was definitely our deciding factor in using a VA-guaranteed loan. We shopped around quite a bit, and found a lender who does lots of VA loans. There were no junk fees, no points, no origination fee, etc. Here is a basic summary of fees from our GFE:
Apraisal (by VA Appraiser): $350
Flood Cert: $13
Credit Report: $14.50
Settlement/Escrow Fee: $525
Title Insurance: $875
Recording Fee: $100
Survey $150
I would have to check the HUD 1, but I know we got some money back at closing because the fees were even less than the GFE.
We wanted a quick close date and our realtor and the seller's realtor were both skeptical about closing so quickly. However, the day the contract was accepted our lender ordered the VA appraisal and it was done the next day! Even our lender (who does a lot of VA loans) was shocked. The house was not in perfect condition (built in 1920s), but the VA appraiser gave a glowing report.
We were ready to close within a week or so. Everyone involved was shocked. I attribute it to a combination of a great loan officer, meticulous completion of paperwork by us and good luck.
We just refinanced at 5.5 percent with the original loan officer. We did a VA Streamline Refi, and again, the service-connected disability meant we didn't have to pay a funding fee. Our total costs came to $1200 (not including escrows of course).
You have to be careful though, because people will try to take advantage. If you are going to refinance a VA loan, don't go with a lender who will charge outrageous fees. I contacted a few companies who wanted to charge anywhere from $4k to $7k to refinance. That's just ridiculous.
(Among the worst offenders were Countrywide, VA Mortgage Center, VA Loan Program and I-Freedom Direct.)
Anyway, we had a great experience, and because we're exempt from the funding fee for as many times as we want to use a VA loan, we will definitely finance our next home using a VA-backed mortgage.
I just wanted to share our experience. After all, if you serve your country you have a VA loan entitlement, and in many cases it can be a very good deal. If anyone has questions, feel free to PM me.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
My experience with a VA loan
closing costs that va cannot pay
