When you're in escrow as an agent with a transaction that is utilizing a VA loan, generally, there is always a VA funding fee. However, some good info for you to know as an agent is that some people are exempt from paying the VA funding fee in a real estate transaction.
The funding fee is a percentage of the loan amount which varies on the type of loan (1st time use vs subsequent usage) and the veterans military category. More on this below. Here's the funding fee chart for your files and to use in being able to explain this to your client.
Veterans have the option to finance the funding fee or pay for it in cash, but it must be paid during COE (Close Of Escrow). Imagine how good you could look to your client if you asked a few poignant questions and discovered they weren't required to pay this? Do you think they'd refer you to all their military friends because you understood them? So who's exempt?
- Veteran receiving VA compensation for a service connected disability OR
- Veteran who would be entitled to receive compensation for a service connected disability if you did not receive retirement or active duty pay OR
- Surviving spouse of a veteran who died in service or from a service connected disability
For example on a $300,000 home purchase a regular military vet will pay 2.15% which translates to a $6,450.00 saving. Whoa Alex, that's a sizeable chunk of change.
So as a Realtor, 3 easy questions to ask a veteran can result in saving them thousands of dollars and make you look like a savior, think that will get you referrals from that client, I do?
Who is exempt from paying the VA funding fee in a Real Estate transaction?