The Department of Veteran Affairs created the VA loan program to help veterans and their families buy homes. One of the advantages for Veterans is that the VA limits the amount of fees the lender and title company is allowed to charge the buyer. Some of the non-allowable expenses are considered “junk fees,” while others represent actual costs of business for the lender or title company. If you are selling your home to a veteran through a VA loan, you need to be aware of these fees because the lender and title company will usually pass them on to you.
Non-Allowable Fees
The fees which the VA prohibits veteran buyers from being charged are called “non-allowable fees.” Though these will vary between lenders and title companies, there are two primary fees you as the seller should be aware of. Most lenders charge a fee called a processing or underwriting fee. This is different from the origination fee. It is typically between $300 and $900. The is a non-allowable fee. Some lenders waive it on VA loans, but many will charge it to the seller. The other non-allowable fees are HOA Transfer Fees (only apply if your home is located in a community with an association that includes a transfer fee) and a title expense and will be called an escrow, settlement or closing fee. It differs by title company, state and purchase price, with a range anywhere from $250 to $2,000. Check with a title company in your state to learn what is typical.
Negotiate with your Buyer
If you’ve received an offer from or know that you are selling your home to a veteran, keep these costs in mind during negotiations. Your buyer should come to you with a pre-approval letter from a lender to verify their qualification. The letter will specify if they are obtaining a VA loan. Do not let this discourage you from accepting their offer. Not only is it illegal to discriminate against a veteran, the VA also offers a very good loan program. But it is within your rights to negotiate based on the added cost you know you will incur.
Ask your realtor to talk with the buyer’s loan officer directly. Obtain a list of exactly which non-allowable fees will be charged. You can also ask for a copy of the “Good Faith Estimate.” Though this list of loan charges is only required to be provided to the buyer, it shows all fees the lender will be charging, even to the seller. If fees are not on the initial GFE, they cannot be added later.
Grants and Subsidies for Veterans
Besides the VA loan program, there are other benefits to buying a home as a veteran. Grants and subsidies from local communities and housing initiatives may be available to help cover some of the loan costs for both buyers and sellers. Though the onus is typically on a buyer to find out if they can get any assistance in buying a home, if you are selling to a veteran, it is to your benefit to know about any programs in your area. These assistance grants can be used to pay VA non-allowable costs in addition to the buyer’s other costs of obtaining a loan. Talk to your community housing authority before listing your home to find out what might be available in your area.
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please give us a call and we’d be happy to assist you!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Hilliard 43026 Lewis Center 43035 New Albany 43054 Pickerington Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235
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