Fees The Seller Must Cover
- Real estate professionals’ commission fees. Realtors have to get paid too, so any commission fees they would collect from the sale of a home or property are covered by the seller.
- Buyer broker fee. Similar to the commission fees listed above, this covers any brokerage fees a real estate broker may charge. In most cases, both the listing broker and the buyer’s agent’s broker share in the commission.
- Brokerage fee. A brokerage fee is required when a broker is engaged to complete transactions or fulfill other specialized needs, including purchases, sales, and negotiations.
- Termite report. No one wants to get a house that’s at risk of a termite infestation. Because the seller is trying to leave that home, they are responsible for proving that the house is structurally sound and not getting eaten away by the voracious bugs. This is always the seller’s responsibility unless the buyer is using a reference loan.
What Makes Va Closing Costs Different
Mortgages backed by the VA are inherently different from standard mortgages because the Department of Veteran Affairs promises lenders that they will be able to recoup someâor allâof the loan if the home goes into foreclosure. That kind of backing significantly lowers the amount of risk the lender anticipates by providing the loan, thus allowing veterans to get approved even if they don’t offer a down payment.
Because lenders generally see them as a safer bet, VA-backed mortgages offer lower closing costs. Though typical closing costs range anywhere from 2% to 5% of the home’s purchase price, similar costs for VA-backed loans have a funding fee rate that sits between 1.4% and 2.3%, according to the VA. Using that same example from above, a home listed at $363,300 would have only $8,356 in closing costs.
Can I Get A Second Va Appraisal
You cant request a second appraisal just because you think the home is worth more than the appraisal provided in the homes Notice of Value .
However, you may be able to request a second appraisal or reconsideration of the NOV if you believe the appraiser missed information that could affect valuation or the appraisal fell short of VA standards or other applicable guidelines.
You can not request a VA appraisal for any property which already has a valid NOV.
However, a non-VA appraiser can provide an additional appraisal to support a request to increase the value.
According to the VAs lender handbook, lenders or sellers must cover the cost of a second appraisal unless the veteran purchaser requests the reconsideration of value themselves.
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Who Covers For Non
There are a number of ways that these non-allowable fees can be covered. In some cases, the seller can cover the costs of these fees. However, they can only contribute up to 4 percent of the sale price or the appraised home value whichever is lower. If the seller cant or wont cover any of these non-allowable fees, then the lender can pay for them through a lender credit in exchange for a higher interest rate on your loan. They can also just charge the maximum amount of 1 percent for the origination fee and use that to cover those costs.
Covering Closing Costs For Va Home Loans
Closing costs can amount to a significant cost that you may not be able to pay upfront. However, you have a few options. First, you can attempt to bargain with the seller. The seller can help with not just the non-allowable closing costs, but the other closing costs as well.
If the seller wont pay for your closing costs, then you could have them rolled into your VA loan so that you dont have to pay for them upfront. However, the only way to do this is to get the seller to temporarily cover your closing costs upfront. If they agree, then the lender will be able to increase your VA loan by that amount. This way, the seller will get the money they put up for your closing costs back almost immediately.
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Common Questions About Va Appraisals
- What is a VA appraisal?
- Is a VA appraisal mandatory?
- How do I order a VA appraisal on a VA loan?
- Who pays for the appraisal?
- Can the buyer be present at the appraisal?
- What are Minimum Property Requirements?
- How long does an appraisal take?
- How do I check the status of the appraisal?
- What is a Notice of Value?
- Can the seller see the appraisal?
- How long is a VA appraisal good for?
- What happens if a VA appraisal has complications?
- Can I dispute a VA appraisal?
If youre considering using a VA loan to fund the purchase or refinancing of a home, youll first need to go through the VA appraisal process. Like a conventional loan, a VA loan requires an appraisal to determine if the asking price of the home is fair and that the house is safe and sanitary. These property requirements ensure that you, the home buyer, is purchasing the home for a reasonable price.
Final acceptance of your VA loan hinges on the VA appraisal process. The VA will consider the appraised value and any notes the appraiser lists regarding the condition of the property before deciding whether to approve your VA home loan.
Waiving Mpr Repair Requirements
All homes are unique. While borrowers cannot waive VA appraisals the VA will consider requests to waive MPR repairs under three conditions.
- The request is signed by the Veteran borrower.
- The lender agrees with the Veterans request.
- The property is habitable from the standpoint of safety, structural soundness, and sanitation.
A waiver request is just that, a request. The VA can accept or reject a repair request as it prefers.
For more information, speak with loan officers who specialize in VA financing.
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What Are Va Appraisal Fees
VA appraisal fees vary by state. And in large states, like California, fees may vary by county.Effective December 1, 2021, fees for single-family homes can range from $525 in South Carolina to over $1,300 in parts of Alaska. If youre purchasing a manufactured home or multi-family property, expect the fees to be a bit higher.
In most cases, for a single-family VA appraisal, youll pay between $500 and $800 . But the fees may be over $1,000 in some high-value counties.
If youre purchasing a manufactured home, expect to pay an extra $50-$100. And if youre looking at multi-family properties, youll probably pay an extra $200-$300.
Who Pays For The Appraisal On A Va Loan
The buyer will need to pay for VA appraisals. Because youre the one applying for the loan, you are responsible for the cost of the appraisal. The VA appraisal fee can vary by location and the size of the property, but it usually costs between $500 to $800. Youll need to pay this fee before the lender requests a VA home appraisal.
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What Determines Your Non
When you close with most home loans, the list of fees is pretty robust, while the VA loan allows lenders to charge a 1% mortgage origination fee.
The flat fee is intended to cover the lenders costs. A few of these costs include the lender appraisal fees, escrow fees, tax service fees, document preparation fees, and loan application fees.
Additionally, this 1% flat fee allows borrowers to easily determine what amount of fees theyll owe at closing. You are less likely to be surprised by a fee since all of the costs are wrapped up in this 1% cost.
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Va Appraisal To Determine Fair Market Value
The VA appraiser will look for at least three comparable homes that are similar in square footage, age, and condition that have sold in the area of the home youre buying. The selling price of these homes will be used to calculate the fair market value.
If the house you are purchasing is 1,500 square feet and the selling price is $180,000, thats a value of $120 per square foot . The appraisers report might include three comps ranging from $118 to $122 per square foot, which shows a comparable selling price to the amount youre paying for your new home.
The fair market value plays a crucial role in a lenders evaluation of your loan. They want to make sure that the home youre buying is worth the purchase price because if you default on your loan, the lender can attempt to sell the home at its approximate market value to recoup their loss.
What happens if the fair market value is lower than the sale price? You have a few options to work around this issue.
Additional Va Appraisal Fees Allowed
Occasionally, there are circumstances which put additional work on an appraiser. VA realizes this and will allow cases of extra fees to cover these areas. Although, any extra fees must be approved by the applicable VA Regional Loan Center prior to inspection. Examples of possible extra VA appraisal fees include
- Complex properties
- Unusual circumstances
- Extra transportation requirements
- Additional work required for final inspection of new construction **
** On new construction, a final inspection fee is allowed up to typically $150. But, if additional work is needed during the final inspection, an extra $50 could be approved. So, lets get into the state maximum VA appraisal fees.
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Meeting The Va Minimum Property Requirements
The second part of the VA appraisal process is determining whether a home meets the VAs Minimum Property Requirements. The VA appraiser will assess the interior and exterior of the home and make note of issues that will need to be repaired before the loan can close.
The appraisers evaluation is not a home inspection, however. A home inspection is a much more detailed look at a property and while its not required for a home purchase, its highly recommended.
The VA Minimum Property Requirements are extensive and detailed, but here is an overview.
Negotiate For The Seller To Pay The Closing Costs
The VA also allows for the seller to pay all of the closing costs that are associated with the loan.
This includes the
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What Happens If The Va Appraisal Is Low
A low appraisal can trip up the homebuying process because the VA loan amount can’t exceed the home’s market value.
If the estimated market value will likely be less than the sales price, the appraiser must notify the lender before finishing the report. The lender or others involved in the transaction then have two business days to submit additional sales data for comparable homes in the area. Appraisers use sales of comparable homes, known as “comps,” to help establish market value.
The appraiser will consider the data and may make adjustments if the information has any bearing on the home’s value.
If you think the value is low after the appraisal is completed, you can usually ask the VA to reconsider the value. Ask your lender how to make this request in writing. The VA staff will review the appraisal report, along with any additional market data submitted, and determine if the appraised value should be increased.
Usually you can ask the VA to reconsider the value for a cash-out refinance. But the VA has suspended that process until further notice due to the coronavirus.
About the author: Barbara Marquand writes about mortgages, homebuying and homeownership. Read more
Is A Home Inspection Also Required If I Complete The Va Appraisal
A home inspection isnt technically required by the VA, but it is a critical process for protecting your interest as a home buyer. While the appraisal simply confirms that the minimum standards are met, it does not provide a detailed report on the condition of the home like a home inspection will. With your home inspection, youll get a complete report of all accessible parts of the home so that you know exactly what youre getting and what the potential issues are before committing to the purchase. Learn more about the differences between the two reports here.
At OVM Financial, we understand that the VA appraisal and loan process can be confusing. But our loan officers work with the VA every day to make home loans accessible to veterans and military members, so we can help you navigate the process. You can contact us at 757-296-2148 to get all your loan questions answered. And if youre ready to apply for a home loan, you can start your loan application online at ovmfinancial.com/QuickStart.
Have Questions about VA Loans?
Contact our dedicated team online or via email to get personalized answers to your questions.
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Va Loan Appraisal Fees: Who Pays
There is often some question about who is required to pay for certain aspects of the VA home loan process. When the buyer finds a home he or she wants to make an offer on, it must be appraised by a VA-approved professional to insure the property is inhabitable, and meets VA minimum property requirements.
The appraiser may find areas which need correction or repairs any such area must be addressed to the satisfaction of the VA before the loan is closed or within a reasonable amount of time as described in VA regulations.
An appraisal which requires such fixes may also demand a compliance inspection to happen at a later date to insure any issues are indeed corrected to the satisfaction of the Department of Veterans Affairs. In both casesthe initial appraisal and any required compliance inspectionthe borrower is responsible for paying the appraisal fee. The borrower is also required to pay if he or she requests a second appraisal or a reconsideration of value.
But the VA borrower cannot be required to pay for appraisals requested by a third party. The borrower and the lender may request an appraisal, but if the seller or some other third party wanted an appraisal it would have to be paid for by the third party.
VA loans are designed to prevent arbitrary requests for re-appraisal simply because the borrower, lender, or seller may disagree with the results of the original review of the property. The VA reviews requests to re-value a home on a case-by-case basis.
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Va Home Loans Are Different Than Conventional Loans So It Pays To Know In Advance
VA loans are very different than conventional loans. Do your due diligence when preparing for a VA loan application. Understanding the upfront costs of a VA loan is important. Even though there are certain closing costs that you wont have to pay, there are other fees that you will be required to pay that arent charged on conventional loans, such as the VA funding fee. Get an idea of what it will cost to close a loan and what your options are by familiarizing yourself with the VA loan program. This will make it easier to budget for your home purchase and to prepare yourself for the home-buying process.
If you would like to learn more information on VA loans, click here.
