VA Closing Costs

Get the Facts About Itemized Fees and Charges

The VA guidelines state that the veteran can pay a maximum for all customary and reasonable amounts for any and all of the "Itemized Fees and Charges" designated by VA as defined below plus a one percent (1%) flat charge by the lender plus reasonable discount points. There are some special provisions, which apply to other different VA loans such as construction, improvement and repair loans.

All Charges and Itemized Fees

The Department of Veterans Affairs defines allowable charges and fees that the veteran borrower can pay or closing costs that may be charged to the borrower. All of these costs are determined as reasonable and customary by each local VA office. All other costs in the transaction are considered non-allowable. They are usually paid by the seller when purchasing a new home or by the lender when refinancing your current VA mortgage. These items are as follows:

• Appraisal and compliance inspections
• Recording fees
• Credit report
• Prepaid items, including a portion of taxes, assessments, and similar items for the current year chargeable to the veteran and the initial deposit for the tax and insurance account.
• Hazard insurance: The veteran can pay for the hazard insurance premium. This includes flood insurance, if required.
• Flood zone determination
• Survey
• Title examination and title insurance
• VA funding fee (unless exempt from the fee with a 10% minimum disability from the VA)

For refinancing loans only, the veteran can pay charges for Express Mail when the saved per diem interest cost to the veteran will exceed the cost of the special handling. FEES AUTHORIZED BY VA: Additional fees, which vary upon local variances, may be charged to the veteran if specifically authorized by VA.

The list below list examples of items that CANNOT be charged to the veteran or non-allowable "itemized fees and charges."

Document preparation, loan closing or settlement, attorney services for anything other than title work, preparing loan papers for conveyance fees, locking in interest rate services, photographs, stationery, mailing or postage charges, telephone calls, amortization schedules, general overhead, membership, escrow charges or fees, document preparation and / or assignment, notary, loan application, processing, loan broker or finders fee other than your mortgage company, trustee's fees or charges and tax service.

When negotiating a real estate contract, it is wise to review allowable borrower fees and charges. Many items can be paid for by the seller of the home and can be negotiable when presenting an offer on a home to the seller. We strongly suggest that you utilize the services of a real estate professional and consult with your real estate professional when handling the transaction.