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VA Mortgages: Allowable Closing Costs and Non-Allowable Closing Costs

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Mortgage and Lending with Keystone Home Finance - NMLS#834342 - Conventional - FHA - VA -USDA - Jumbo Programs - Direct Phone 412-726-1654 NMLS# 137243

VA Mortgages in Pennsylvania and the rest of the country have certain limits on what types of closing costs can be charged to the Veteran and what fees can not be charged to the Veteran. The VA imposes these closing cost guidelines in the interest of protecting the Veteran and assuring that the Veteran receives a mortgage with customary and reasonable closing costs.

 

It is important for all parties involved in the transaction (Buyers, Sellers, Realtors, Settlement Agents) to be aware of what closing costs can and can not be charged to the Veteran. Knowing this information prior to writing up a sales contract helps all the parties coordinate the payment of some standard closing costs in a way that will be compliant with VA guidelines. 

 

The Veteran may not pay for any fee that is considered a Non-Allowable VA Closing Cost, however, these non-allowable costs may be paid by the Seller or Lender.

 

Below is a summation of Allowable VA Mortgage Closing Costs and Non-Allowable VA Mortgage Closing Costs

 

 VA Non-Allowable Closing Costs   

 

Admin Fees

 

Any “made up” fees

 

Any repairs required by the appraiser to be made to the home prior to closing (purchases)

 

Application Fees

 

Commitment Fees

 

Document Preparation Fees

 

Escrow Fees

 

Fees for Amortizations Schedules

 

Fees for Truth in Lending Statements

 

Interest Rate Lock In Fees

 

Mortgage Broker Fees

 

Notary Fees

 

Processing Fees

 

Real Estate Commissions

 

Settlement Fees

 

Tax Service Fees

 

Termite Inspection Fees

 

Underwriting Fees

 

 

 VA Allowable Closing Costs 

 

VA Funding Fee : This is charged by the VA to maintain the VA home loan program.  This amount varies according to the eligibility status of the Veteran, the percentage of the down payment or equity and any previous use of the VA Entitlement.   The amount required for Funding Fee can be found here

 

Origination Fee : to cover any lender charges and services, this fee can not exceed 1%

 

Discount Points : the veteran can choose to buy down the interest rate on the loan using Discount Points

 

Appraisal Fee

 

Recording Fee : to record the mortgage and deed with the local county

 

Credit Report

 

Prepaid Items : amount needed for escrow and any prorated amount of property taxes or assessments due at closing between buyer and seller

 

Homeowners Insurance

 

Flood Insurance : if needed

 

Survey

 

Title Examination/Title Insurance : to insure the title of the property is free of any previous liens

 

Local Fees : These are fees specific to the local government where the property is located.  Pennsylvania has a 1% state transfer tax.   In addition, there is also a local transfer tax that can vary by local municipality.  Typically the local transfer tax is also 1% but this can also be vary, so make sure to check on this.  Philadelphia, Pittsburgh and some other of the larger cities tend to have higher local transfer taxes.  This tax is based on the sales price of the transaction and is usually split evenly between buyer and seller.  

 

 

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