VA Loan Fees The Borrower Should Not Be Charged
When buying a home, there are fees and expenses the borrower must pay as a standard part of the home loan process. For VA loans, those fees include the VA loan funding fee, appraisal fees, compliance inspection fees where applicable and other expenses. For some types of VA loans, some fees might come with the option to be included in the loan amount, in other cases the fees must be paid up front.
But some itemized fees cannot be charged to the borrower. The Department of Veterans Affairs describes these fees in VA Pamphlet 26-7. According to Chapter Eight of VA Pamphlet 26-7, those itemized fees include the following:
- Lender’s appraisals
- Lender’s inspections, except in construction loan cases
- Loan closing or settlement fees
- Document preparation fees
- Preparing loan papers or conveyancing fees
- Attorney’s services other than for title work
- Interest rate lock-in fees
- Postage and other mailing charges, stationery, telephone calls, and other overhead
- Amortization schedules, pass books, and membership or entrance fees
- Escrow fees or charges
- Notary fees
- Commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser
- Trustee’s fees or charges
- Loan application or processing fees
- Fees for preparation of truth-in-lending disclosure statement
- Fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not
- Tax service fees.
Why can’t these fees be itemized and charged to the borrower? Because they are already covered by something called the “Lender’s Flat Fee” or “Lender’s 1% Fee”. That flat fee must cover all expenses listed above and VA loan rules prohibit the borrower from being double-charged.
That rule extends to other areas–there’s no double-charging allowed for services already rendered. For example, the borrower should not be required to pay a fee for a service already given such as a flood zone determination or similar work. If the bank makes its own flood zone determination, it should not charge the borrower for it.
If you have questions on these fees, contact the VA directly by calling 1-800 827-1000.
Do you have questions about VA home loans? Ask us in the comments section.