VA Funding Fees
VA Funding Fees are the money’s a borrower pays to use their VA benefits when purchasing a home. The Funding Fees are normally added to the total principal of the loan. When the borrower is putting no money down, the result of adding the Funding Fees is the mortgage is higher than the sale price of the home. Though the funding fee may not seem like a lot at the time of purchase in the recent market of low appreciation if any, this increase to the mortgage can cost borrowers when they try to sell.
The VA Funding Fee is different depending on if the veteran is using the benefit for the first time or for subsequent purchases. The Funding Fee is also variable depending on the amount the borrower puts down on the property. Most people think VA 100% financing and many are not aware of the decrease in the Funding Fee if money is put down on the property.
The information below is for VA funding fees after 10/1/2004.
|
Veteran |
Down Payment |
First Time User |
Subsequent Use thru 9/30/2011 |
|
Full Time Military |
None |
2.15% |
3.3% |
|
Full Time Military |
5% up to 10% |
1.50% |
1.50% |
|
Full Time Military |
10% or more |
1.25% |
1.25% |
As active military members, over the course of your career and lifetime, you may purchase several homes. What does using a down payment mean to you? Let’s look below.
|
Home #: |
Purchase Price/ Interest Rate |
No Down Payment |
5% Down Payment |
10% Down Payment |
|
1 |
$120,000/ 5.125%
|
$ Down: $0 FF Amt: $2580 P&I Payment Monthly:$653.38 |
$ Down: $6000 FF Amt: $1710 P&I Payment Monthly:$630.03 |
$ Down: $12000 FF Amt: $1350 P&I Payment Monthly:$595.40 |
|
2 |
$150,000/ 5.75% |
$ Down: $0 FF Amt: $4950 P&I Payment Monthly:$904.25 |
$ Down: $$7500 FF Amt: $2137.50 P&I Payment Monthly:$844.07 |
$ Down: $15000 FF Amt: $1875 P&I Payment Monthly:$798.77 |
|
3 |
$175,000/ 5.75% |
$ Down: $0 FF Amt: $5775 P&I Payment Monthly:$1054.95 |
$ Down: $8750 FF Amt: $2493.75 P&I Payment Monthly:$984.74 |
$ Down: $17,500 FF Amt: $1968.75 P&I Payment Monthly:$930.62 |
|
4 |
$200,000/ 5.75% |
$ Down: $0 FF Amt: $6600 P&I Payment Monthly:$1205.66 |
$ Down: $10,000 FF Amt: $2850 P&I Payment Monthly:$1125.42 |
$ Down: $20,000 FF Amt: $2250 P&I Payment Monthly:$1067.06 |
Looking at the chart above, the difference in monthly payments changes substantially as the down payment increases and the funding fees are reduced. So bottom line what does this mean to you the borrower besides reduced fees? When you become the seller it will impact what you need to get from the house in regards to overall cost.
Originally Posted on www.SumterHomePros.com
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