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How to Calculate Mortgage Closing Costs for a VA Loan
Author David Schneider | Jan 14,2008
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Closing cost calculations for a VA loan are done the same as any other type of mortgage. However, with VA loans, the amount of the down payment required is usually less than standard mortgages. There are also some slight discounts on the amount of points paid on the loan. As a VA loan mortgage borrower, it is important that you understand the costs involved in obtaining a mortgage.VA Loan Closing CostsWhen applying for a VA loan, the first thing you will receive is a Good Faith Estimate (GFE). It is legally required that all lenders provide a GFE to potential borrowers. The Good Faith Estimate is a detailed list of the costs you will be required to pay in order to close the loan. While this is just an estimate of the costs, it will give you a good idea about the amount of money you will need to cover closing costs. There are four main categories of closing costs: lender fees, escrows, government charges and other fees and charges. VA Loan Mortgage Lender Fees -- Points/Origination FeeOne point of a mortgage is equivalent to one percent of the mortgage loan amount. Some lenders charge an origination fee and some do not. Borrowers can also choose to buy down the interest rate on the mortgage by paying points. For VA loans, the maximum amount of points is one percent of your mortgage amount.VA Loan Mortgage Lender Fees -- Document Preparation FeeMortgage lenders charge a documentation preparation fee to draw up, print and copy all of the legal documents that you will sign at the closing table.VA Loan Mortgage Lender Fees -- Tax Service FeeMortgage lenders charge a tax service fee to obtain a tax paying service.VA Loan Mortgage Lender Fees -- Other Lender FeesContact your VA mortgage lender for more specific details on any additional fees charged for your particular type of loan.VA Loan Mortgage Lender Fees -- EscrowsBorrowers make payments into an escrow account upfront. The escrow account pays future hazard insurance and property tax bills. Mortgage lenders determine these fees by calculating the monthly charge for the insurance and tax fees, and then dividing the total by 12. The amount of escrow required varies for each lender. However, mortgage lenders generally call for at least three months of the fees to be held in escrow.VA Loan Mortgage Lender Fees -- Closing/Settlement Fee The title company charges a closing or settlement fee, which covers the cost for preparing documents, conducting the closing, working with the mortgage lender, working with other parties involved in the transaction and recording the mortgage and deed of the property.VA Loan Mortgage Lender Fees -- Title Abstract/ExaminationThe title company also charges this fee for searching public records to determine ownership of the property. The title abstract/examination fee also covers research for existing liens on the property that need to be paid off by the seller before the time of the closing.VA Loan Mortgage Lender Fees -- Title Insurance PremiumThe amount paid for title insurance coverage comprises the mortgage loan amount and purchase price, as determined by rates filed with each jurisdiction insurance commission.VA Loan Mortgage Lender Fees -- Delivery FeeThe borrower pays all fees for loan documents sent by courier or overnight delivery.Governmental Recording Charges -- State and County Recording Fees State and local governments charge fees when buying a home. These fees may include transfer and/or recording fees and can vary from state to state.Other Mortgage Closing Costs for a VA LoanOther fees associated with a VA loan may include a survey of the property, maintenance fees and property taxes. You need to contact the title company and/or your mortgage lender to verify the total amount of your closing costs or any fees that charged at closing. |
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