What Is The VA Loan Funding Fee?
Many buyers who want to get a VA loan often are confused about the VA funding fee. This articles is intended to help clear some of the confusion.
Why do I have to pay a VA funding fee and what is it?
The funding fee is a fee charged by the Veteran Affairs. The funding fee takes the place of mortgage insurance. In order to reduce the cost of administering the VA home loan program, each Veteran must pay a funding fee to VA at the closing of their loan.
The funding fee can be included (financed) into the loan or paid by a seller, lender, veteran or other third party. For all types of VA loans, the loan amount may include the VA funding fee. The funding fee rate periodically changes to reflect the most current cost of administering the program, or to assist a certain class of veterans (such as a funding fee exemption).
How will I know if I am exempt from paying the VA funding Fee?
Some veterans may be exempt from this fee if any of the following criteria pertains to you: Veterans receiving VA compensation for service-connected disabilities, Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay, Surviving spouses of veterans who died in service or from service-connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).
What if my exemption is not verified by the time of closing?
If the veteran’s exemption status has not been verified prior to the loan closing, payment for the funding fee must be submitted as if the borrower was not exempt. Be sure that they indicate in the closing package that the veteran claims to be of exempt status. VA will then determine the borrower’s status and refund the funding fee if appropriate.
Do I get my money back for fees if my loan does not close?
Any of the borrower’s out-of-pocket expenses for any itemized fees and charges already incurred, such as an appraisal and/or credit report, will not be refunded. A refund will only be given if an exempt veteran has paid a funding fee, or if a miscalculation of the fee caused an overpayment. If the lender has already collected a loan origination fee from the borrower, the lender must refund the fee. This applies to a loan that does not close for any reason, including but not limited to the borrower going to another lender.
If you have further questions about the VA funding fee, please visit your nearest VA hlc (home loan center).
If you would like to apply for a VA loan and see if you qualify to not pay the VA funding fee, visit VA Loans . – Philip Georgiades CLS San Diego VA Home Loan Centers.