VA Loan Closing Costs (insurance, loan officer, interest rate, escrow)

[vcharls]

I have received a GFE from our broker regarding cc for VA loan.

I am confused about it. It says that we have to pay a loan origination fee of 1% and then it also lists a fee for underwriting, escrow fund fee, admin fee, processing fee.....etc. I thought it would be a 1% origination fee charged but not the non-allowables charged as well.

We are paying our own cc, sellers are not paying any.

Does anyone know?

Thank you.

[VictorBurek]

What rate are they quoting you? To get a par interest rate you would have to pay the one point plus closing costs. You can decide to pay less in fees but your interest rate will be higher which will cost you much more in the long run.

[eric#1]

Looks quite similar to CC for last VA loan/HUD-1 I had close. Not sure what the question is regarding.

[vcharls]

Thanks for the replies. I wanted to know if on VA loan closing costs you can be charged an origination fee AND the underwriting/processing escrow fee etc?

[Bluecielos]

Are you doing a refinance or a purchase?

There are some fees that a veteran is not allowed to pay and maybe they are adding fees that you can pay to cover the ones you can't

[nmb30]

Here is the list of VA non-allowable fees straight from the VA hand book

The following list provides examples of items that cannot be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat fee.

·lender’s appraisals
·lender’s inspections, except in construction loan cases
·loan closing or settlement fees
·document preparation fees
·preparing loan papers or conveyancing fees
·attorney’s services other than for title work
·photographs
·interest rate lock-in fees
·postage and other mailing charges, stationery, telephone calls, and other overhead
·amortization schedules, pass books, and membership or entrance fees
·escrow fees or charges
·notary fees
·commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser
·trustee’s fees or charges
·loan application or processing fees
·fees for preparation of truth-in-lending disclosure statement
·fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and
tax service fees.

Here is another excerpt from the hand book -

The veteran can pay a maximum of:

·reasonable and customary amounts for any or all of the “Itemized Fees and Charges” designated by VA, plus
·a 1 percent flat charge by the lender, plus
·reasonable discount points.

Note: Some special provisions apply to construction, alteration, improvement and repair loans.

Reference: See section 2, subsection e, “Construction Loans.”

[txgolfer130]

Originally Posted by nmb30

Here is the list of VA non-allowable fees straight from the VA hand book

The following list provides examples of items that cannot be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat fee.

·lender’s appraisals
·lender’s inspections, except in construction loan cases
·loan closing or settlement fees
·document preparation fees
·preparing loan papers or conveyancing fees
·attorney’s services other than for title work
·photographs
·interest rate lock-in fees
·postage and other mailing charges, stationery, telephone calls, and other overhead
·amortization schedules, pass books, and membership or entrance fees
·escrow fees or charges
·notary fees
·commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser
·trustee’s fees or charges
·loan application or processing fees
·fees for preparation of truth-in-lending disclosure statement
·fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and
tax service fees.

Here is another excerpt from the hand book -

The veteran can pay a maximum of:

·reasonable and customary amounts for any or all of the “Itemized Fees and Charges” designated by VA, plus
·a 1 percent flat charge by the lender, plus
·reasonable discount points.

Note: Some special provisions apply to construction, alteration, improvement and repair loans.

Reference: See section 2, subsection e, “Construction Loans.”

This is perfect. I highlighted the ones I normally see people try to slip in, and are usually what trips up final approval.

[Rhome]

Originally Posted by nmb30

Here is the list of VA non-allowable fees straight from the VA hand book

The following list provides examples of items that cannot be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat fee.

·lender’s appraisals
·lender’s inspections, except in construction loan cases
·loan closing or settlement fees
·document preparation fees
·preparing loan papers or conveyancing fees
·attorney’s services other than for title work
·photographs
·interest rate lock-in fees
·postage and other mailing charges, stationery, telephone calls, and other overhead
·amortization schedules, pass books, and membership or entrance fees
·escrow fees or charges
·notary fees
·commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser
·trustee’s fees or charges
·loan application or processing fees
·fees for preparation of truth-in-lending disclosure statement
·fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and
tax service fees.

Here is another excerpt from the hand book -

The veteran can pay a maximum of:

·reasonable and customary amounts for any or all of the “Itemized Fees and Charges” designated by VA, plus
·a 1 percent flat charge by the lender, plus
·reasonable discount points.

Note: Some special provisions apply to construction, alteration, improvement and repair loans.

Reference: See section 2, subsection e, “Construction Loans.”

nmb30, I really appreciate that you posted the list. On the list, it also includes escrow or charges. Does it only refer to the escrow or charges which suppose to be paid by lender side? I just realize, how important to know the benefits that verterans deserve, it seems like not that many agents or escrow people know anything about VA loan. Currently, we are buying a condo for $330,000 with VA loan. The lender who claims they specialized in VA loan wanted to charge us about $5,400 for interest rate lock-in fee. Therefore I decided to check all the fee one by one according to the VA handbook.

[SmartMoney]

Whoa, I see all these fees flying over the place, but suspect only part of the story is being told. $5400 for a lock in fee is rather high, unless it's for a long-term lock or has a float down feature. Lock in fees are paid prior to loan closing and are credited towards the closing costs at the closing table. They are also refunded if the loan is declined. There is no way a typical lock can have that high of a lock in fee........chances are, you are referring to lender closing costs or even total closing costs......completely different things. Also, there is a funding fee on the estimate......that is usually financed, unless paid in cash.

To the OP, didn't your Realtor make sure you were put in front of a loan officer before you made an offer? If so, you need to fire that lender, and find another. Now. NO ONE IS LOOKING OUT FOR YOUR INTERESTS, HERE. It's the lender's responsibility during a prequalification that you understand the closing costs and payment before you enter into a purchase contract. It's also the agent's duty, as well. If you were unaware that there would be additional closing costs in addition to the Loan Origination, shame on everyone involved.

[SmartMoney]

Yes, these are charges that cannot be charged in the instance of a FLAT FEE SETTLEMENT, which hasn't been typical in any markets that I am familiar with, nor any I have read about in industry journals, forums, or blogs. Maybe a streamline or an online gimmick, but not your typical real estate purchase. Here is a list of VA ALLOWABLE FEES, straight from the VA Lender's Handbook (VBA Pamphlets 26-7 (U.S. Department of Veterans Affairs) chapter 3).

Charge & Description
Appraisal and Compliance Inspections
· The veteran can pay the fee of a VA appraiser and VA compliance inspectors.
· The veteran can also pay for a second appraisal if he or she is requesting reconsideration of value.
· The veteran cannot pay for an appraisal requested by the lender or seller for reconsideration of value.
· The veteran cannot pay for appraisals requested by parties other than the veteran or lender.

Charge & Description
Recording Fees
The veteran can pay for recording fees and recording taxes or other charges incident to recordation.

Credit Report
The veteran can pay for the credit report obtained by the lender.

NOTE: For Automated Underwriting cases, the veteran may pay the evaluation fee of $50 in lieu of the charge for a credit report. For “Refer” cases, the veteran may also pay the charge for a merged credit report, if required.

Prepaid Items
The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account.

Hazard Insurance
The veteran can pay the required hazard insurance premium. This includes flood insurance, if required.

Flood Zone Determina-tion
The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination.

The veteran can pay a charge for a life-of-the-loan flood determination service purchased at the time of loan origination.
A fee may not be charged for a flood zone determination made by the lender or a VA appraiser.

Survey
The veteran can pay a charge for a survey, if required by the lender or veteran.

Any charge for a survey in connection with a condominium loan must have the prior approval of VA.



Charge & Description
Title Examination and Title Insurance (aka "loan closing and settlement fee")
The veteran may pay a fee for title examination and title insurance, if any.

If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.

Special Mailing Fees for Refinancing Loans
For refinancing loans only, the veteran can pay charges for Federal Express, Express Mail, or a similar service when the saved per diem interest cost to the veteran will exceed the cost of the special handling.

VA Funding Fee
Unless exempt from the fee, each veteran must pay a funding fee to VA.

Mortgage Electronic Registration System (MERS) Fee
The veteran may pay a fee for MERS. MERS is a one-time fee for the purpose of electronically tracking the ownership of the beneficial interest in a loan and its servicing rights.

Other Fees Authorized by VA
Additional fees attributable to local variances may be charged to the veteran only if specifically authorized by VA. The lender may submit a written request to the RLC for approval if the fee is normally paid by the borrower in a particular jurisdiction and considered reasonable and customary in the jurisdiction. This can vary widely from region to region. The key is "reasonable and customary." For example, in almost every jurisdiction, Lock Fees for long-term locks (over 60 days) are permitted at time of lock in, provided they are refundable in the case of loan denial.

Originally Posted by nmb30

Here is the list of VA non-allowable fees straight from the VA hand book

The following list provides examples of items that cannot be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat fee.

·lender’s appraisals
·lender’s inspections, except in construction loan cases
·loan closing or settlement fees
·document preparation fees
·preparing loan papers or conveyancing fees
·attorney’s services other than for title work
·photographs
·interest rate lock-in fees
·postage and other mailing charges, stationery, telephone calls, and other overhead
·amortization schedules, pass books, and membership or entrance fees
·escrow fees or charges
·notary fees
·commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser
·trustee’s fees or charges
·loan application or processing fees
·fees for preparation of truth-in-lending disclosure statement
·fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and
tax service fees.

Here is another excerpt from the hand book -

The veteran can pay a maximum of:

·reasonable and customary amounts for any or all of the “Itemized Fees and Charges” designated by VA, plus
·a 1 percent flat charge by the lender, plus
·reasonable discount points.

Note: Some special provisions apply to construction, alteration, improvement and repair loans.

Reference: See section 2, subsection e, “Construction Loans.”