VA Loan Store » VA Funding Fees

The Ultimate Guide To Understanding Your Good Faith Estimate

themightyquin — Mon, 07 Dec 2009 04:11:48 +0000

This video was made and designed to work with the article “Rate Shopping for a VA loan.”

If your serious about getting a great loan then you need to understand two things: first, how to shop for a loan. Second, how to read a good faith estimate. And lucky for you, everything you need to be successful is posted in this article.

Now that we have that out of the way…. Go ahead and push play for this video and hit the crossed arrows to enlarge to full screen. Doing so will allow you to see all the details of this form.

Once you have completed this video, your next step is reading this article that I wrote entitled “Rate shopping for a VA loan.”

Lastly, stop slacking and hurry up and apply for a VA Loan. Act now and fill out the orange form marked “Get Pre-Qualified Here.”

That’s it…… your bulletproof.

Good Faith Estimate 101 for Veterans

themightyquin — Wed, 19 Aug 2009 21:36:56 +0000

One of the most important things that every veteran should know is how to evaluate a Good Faith Estimate or GFE. A good faith estimate is not just a verbal quote of how much you are going to pay but it is actually a document required by the Real Estate Settlement Procedures Act (RESPA).

If you are applying for a loan, the lender or broker should provide you a written estimate within 72 hours after applying for a VA loan.

Don’t get confused if you get multiple GFEs showing different bottom line totals. In most cases, you will receive a preliminary GFE and later, a “Final” GFE after the lender as approved the loan.

Be aware that every bank or mortgage broker will estimate costs differently but it is critical you understand what fees are stated, and whether you are being charged correctly.

Also, remember that a GFE is just an estimate – this is your loan officer’s best guess on how much it’s going to cost you to close your loan.

To make things easier, let’s breakdown the GFE into two categories: lender or broker-associated costs and other costs.

Lender or Broker-Associated Costs – The costs under this category should be more or less accurate. This is basically how much the lender or broker asks you to pay to process your VA loan application. These costs should include but are not limited to: loan origination fees, loan discounts, appraisal fees, credit reports, lender inspection fees, any tax-related service fees, processing fees, underwriting fees, and wire transfer fees. See VA allowable charges for a complete listing of acceptable loan fees.

Other costs – Aside from the lender and mortgage broker, there are also other entities involved in your VA loan application procedure. These bodies require a certain amount to be paid in order to complete your application. Some examples of these costs are insurance premiums, VA Funding Fee, title charges, escrow fees, transfer charges, and any additional settlement charges.

How exactly do you make use of this information?

We recommend you focus your efforts on interest rate AND lender charges because these are the only variables the bank actually controls. All other charges such as taxes, home owners insurance, settlement fees, and escrows will vary dramatically depending on the institution that prepares the GFE.

In some cases, your bank or VA mortgage broker won’t even take the time to quote these third party fees. So, if you get a GFE with very low costs take a second look at what’s actually being charged. You may be surprised to learn your VA lender has omitted 50% of the required information.

Surprisingly, the highest costing GFE can often be the best deal! If your VA lender did a great job, your GFE should be complete. But be aware, this may also translate to a higher bottom line when you compare to other “incomplete GFE’s. A completed GFE will include: all escrows, taxes, home owners insurance. This is also a good indicator that your working with a VA lender that has your best interest at hand and does quality work. Don’t deal with VA lenders that can’t provide accurate documents. That’s the best advice I can give.

In addition to your GFE, and before you make your final decision, ask your VA lender for a performance guarantee and make sure they put it in writing. What is a performance guarantee you ask? This is a document that your VA lender provides guaranteeing your costs on the loan. It will also guarantee your interest rate should you choose to lock the VA loan.

By obtaining a “completed” GFE and performance guarantee you can rest assured your homework is done and your ready to select a VA lender.

To Pay or Not to Pay? The VA Loan Funding Fee

Vikki P. — Mon, 27 Jul 2009 20:19:27 +0000

For guaranteed loans, the law requires the borrower to pay the VA Loan Funding Fee. A veteran will be asked to pay this upfront during the final stage of the loan application process. Though VA home loans provide veterans a no-money-down benefit, a veteran is asked to pay the VA Funding Fee as a contribution toward the cost of this unique benefit. As a result, the VA Funding Fee reduces the cost to taxpayers.

For first time veteran borrowers, the fee is currently at 2.15% while second-time users who don’t want to make a down payment are asked to pay 3.3%. Why are second-timers asked to pay more? It’s pretty simple, these veterans have already taken advantage of the benefit in the past plus they have also had the time to save money to pay for a down payment.

Another important aspect of the VA Funding Fee that every veteran must know is that it can vary depending on the type of service rendered and whether the loan is a purchase, a streamline refinance or IRRL, or simply a cash-out transaction. The following charts show the details of the VA Funding Fee.

Type of Veteran	Down Payment	First Time Use	Subsequent Use for loans 1/1/04 to 9/30/11
Regular Military	None 5% – 10% 10% or more	2.15% 1.50% 1.25%	3.3%* 1.50% 1.25%
Reserve/National Guard	None 5% – 10% 10% or more	2.4% 1.75% 1.5%	3.3%* 1.75% 1.50%

Cash-Out Refinancing Loans

Type of Veteran	Percentage for First Time Use	Percentage for Subsequent Use
Regular Military	2.15%	3.3%*
Reserve/National Guard	2.4%	3.3%*

* The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan.

Type of Loan	Percentage for Either Type of Veteran Whether First Time or Subsequent Use
Interest Rate Reduction Refinancing Loans (IRRRL)	0.50%
Manufactured Home Loans	1.00%
Loan Assumptions	0.50%

Although almost all veteran home buyers pay the VA Loan Funding Fee, there are some exceptions to this:

Veterans with service-related disabilities who are receiving VA compensation
Veterans with service-related disabilities who did not receive retirement pay but are entitled to receive compensation
Surviving spouses of veterans who died while rendering service or from any service-related disabilities

VA Loan Closing Costs 101

Vikki P. — Mon, 08 Jun 2009 20:12:47 +0000

Whether you are applying for VA loan or any mortgage loan, a borrower has to pay the closing costs. But what exactly are you supposed to and not supposed to pay? If you’ve already began your research, you will notice words such as allowable and non-allowables. Veterans applying for VA mortgages or loans are only supposed to pay the “allowables.” David Reed, columnist for Realty Times and Mortgage Originator magazine, has created this easy to remember mnemonics (ACTORS) about the allowable closing costs for veterans:

Appraisal (aka Notice of Value, NOV) or inspection charges

Credit report fees

Title or title-related charges

Origination fees and points

Recording charges

Survey fees if needed

Now that you have an idea of what the allowables are, let’s take a quick look at the non-allowables. Here is a list of fees that CANNOT be charged to a veteran:

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.

Although a lender is not supposed to charge for non-allowables, there is such a thing as a “One percent Guideline.” This simply means that even though there are non-allowables, “the lender is allowed to charge a flat one percent of the loan amount and apply that fee to the various miscellaneous lender charges the veteran may not otherwise pay for,” according to Reed.

Want more tips about VA loans and mortgages? Always visit our website www.valoanstore.com/blog or subscribe to our RSS feed for more useful and free information right at your fingertips.