I receive a lot of questions regarding what fees a Veteran is allowed and not allowed to pay in a real estate transaction in Alameda. Here is a summary of allowable and unallowable costs from one of the lenders I frequently work with.

ALLOWABLE CLOSING COSTS

A Veteran may pay any of the following reasonable closing costs and fees:

• 1% origination fee for purchase and cash-out loans, the origination fee is calculated using the total loan amount, including the financed funding fee
• For IRRRLs, the origination fee is calculated using the payoff minus any cash payments by the veteran, if applicable
• Reasonable discount points: Brokers may charge only those discount points required to buy down the loan’s interest rate – Correspondents/VA Automatic customers are exempt from this requirement, however, the discount points charged must be reasonable and customary
• VA appraisal fee – The veteran may not pay a fee higher than the maximum allowable appraisal fee for the state in which the property is located – See VA Appraisal Fee Schedules
• VA compliance inspector fees – Only if required by the NOV (Notice of Value)
• Recording fees
• Taxes and stamps
• Credit report fees – a $50 credit evaluation fee may be paid in lieu of the credit report fee for automated underwriting approvals
• Pre-paid items
• Insurances (hazard and flood, when required)
• Flood zone determination
• Well and septic inspection fees
• Survey, if required by lender or veteran, except for surveys of condominiums
• Title insurance, title examination, title endorsement, title policy, title search
• Environmental protection lien endorsement
• Express mail fees for refinances if the saved per diem interest cost to the veteran will exceed the cost of the special handling – Anything over $50, provide the invoice to verify fee
• VA funding fee
• Mortgage Electronic Registration System (MERS) fee
• Closing protection letter – Should not exceed $35
• Fraud protection report
• Termite, provided the loan is a cash-out refinance – The borrower may never pay these fees for purchase transactions

If a fee is not listed above, assume VA does NOT permit the veteran to pay it

NON-ALLOWABLE BORROWER-PAID CLOSING COSTS

Generally, the veteran may NOT pay any of the fees listed below, but the seller or lender may pay the non-allowable fees. However, if no origination fee is charged and the fee is not listed in the section below that itemizes fees the Veteran may never pay, the Veteran may pay non-allowable costs up to 1% of the purchase price. The veteran may also pay a combination of non-allowable fees and an origination fee, provided the combination does not exceed 1% of the purchase price.

The non-allowable fees are:

• Attorney fees other than for title commitments
• Lender’s appraisals
• Lender’s inspections, except construction loan inspections and inspections required on the appraisal/NOV
• Loan closing or settlement fees
• Doc prep, underwriting, loan application, admin or processing fees
• Assignment fees
• Photographs
• Interest rate lock-in fees
• E-Mail, fax, copying, postage, stationery, telephone or other overhead charges
• Amortization schedules, Truth-in-Lending fees, etc.
• Notary fees
• Escrow fees or charges
• Commitment fees or marketing fees of secondary purchasers
• Trustee fees
• Fees charged by third parties, regardless of affiliation with lender
• Tax service fees
• Termite inspection fee for a purchase transaction
• Attorney fee that benefits the lender
• Broker fee
• Brokerage fees or commissions charged by real estate agents or real estate brokers in connection with a VA loan
• Prepayment penalties financed through a refinance transaction – When the payoff states a pre-payment penalty is due, veterans may pay pre-payment penalties out-of-pocket only
• FHA/VA inspection fees for builders (Normal new construction inspections of the dwelling are permitted when required by the appraiser)
• Any portion of the seller’s lien(s) or short sale fees
• For purchase transactions, the cost of required repairs and inspections must be paid by the seller. This policy applies to all purchases, including purchases of REO properties. VA does not permit the veteran to pay for repairs other than minor termite damage repairs

For more information about VA financing feel free to call 510-282-5456 or email info@garrick.biz.

Related Articles:

VA Interest Rate Reduction Loan

VA Loan Requirements and Eligibility

Approved Property Types and Loan Limit for VA Loans

How to Purchase a Home with a VA Loan

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Friday President Barack Obama signed a bill that reinstates the recently expired higher loan limits that were in effect for FHA and VA loans through December 31, 2013 but does not provide this extension to Freddie Mac and Fannie Mae.

According to the article on Mortgage News Daily, “The new legislation also sets an annual fee for loans guaranteed by Freddie Mac and Fannie Mae.  This fee is in the amount of 15 basis points on the outstanding principal balance of the loan and is “independent of any guarantee fees upfront on ongoing, charged to the borrower, and the premium loan fee shall not be affected by changes in guarantee fees.”  The fee, according to the bill, is expected to achieve an annual income of $300 million in revenue which “shall be used to pay for costs associated with maintaining loan limits established under this section. “

This is great news for homebuyers who are refinancing or purchasing a home with FHA financing!  Feel free to contact The Werdmuller Group for any questions on the housing and finance markets at info@garrick.biz or 510.282.5456.

To read the full article click here:

http://www.mortgagenewsdaily.com/11182011_revised_loan_limits_loan_fees.asp

Related Article:

 Restoring Loan Limits in Alameda, CA

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The House of Representatives today voted to restore higher loan limits to $729,750!! This is great news considering that the high limits returned to $625,500 in October.

Here is a brief excerpt of an article published today at Bloomberg.com: “For all of the objections from Republican lawmakers and interest groups, the measure survived congressional negotiations on the strength of last month’s Senate vote in favor of an amendment to boost limits for FHA loans and those purchased by Fannie Mae and Freddie Mac. The increase for Fannie Mae and Freddie Mac loans was dropped during the talks, and today’s vote leaves the FHA increase needing only a Senate vote and President Barack Obama’s signature to become law.

Lawmakers who back higher limits say withdrawing federal support could undermine a housing market that has struggled to recover from the 2008 credit crisis. The limits automatically returned to $625,500 in October, spurring lawmakers and housing lobbyists to press for a return to the higher level.”

Feel free to contact The Werdmuller Group for any questions on the housing and finance markets at info@garrick.biz or 510.282.5456.

To read the full Bloomberg Article click here:

U.S. House Backs FHA Loan-Limit Boost Over Republican Objections

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