VA Loan Reader Question: Loan Irregularities
VA home loans, like any mortgage loan, can be intimidating for the first-time house hunter and experienced borrower alike. But there’s no need to feel that you’re going through the process all alone; the Department of Veterans Affairs offers help and advice to home owners who need it at any stage of the borrowing experience.
A recent reader question came in that illustrates the need not just to understand how the VA loan process works from a borrower’s standpoint, but also the need to be literate about your options for help from the VA should you need to use them. One reader wrote in saying:
“I was just informed by my lender in charge of refinancing my VA loan, that the VA funding fee MUST be financed, even though I selected to pay the fee at closing, and thus the originally offered 1.75% point(or $3100) credit towards my closing was significantly reduced…”
The reader adds, “I was told VA funding fee must be financed and what I’m paying at closing for the VA funding fee…is actually the principal amount reduction and the funding fee is then added to the loan. The result, the points credit does not cover any of the principal amount payments I make, and thus my credit was reduced…This just doesn’t seem right, that the VA funding fee MUST in fact be financed and that the points credit a bank offers cannot cover this funding fee because it is not considered part of the closing fees?”
The answer to this issue may be more complex than simply looking up the VA rules to see whether the VA loan funding fee is able to be rolled into the loan. There are many different types of VA refinancing loans.
The VA rules for Interest Rate Reduction Refinancing Loans, for example, state “Some lenders may say that VA requires certain closing costs to be charged and included in the loan. Remember – The only cost required by VA is a funding fee of one-half of one percent of the loan amount which may be paid in cash or included in the loan.”
But the point is this: any time the borrower experiences irregularities–or seeming irregularities–as described above, the first thing the borrower should do is contact the nearest VA Regional Loan Center for advice and assistance. Do not delay–contact the VA for more information and intervention if required.
You can find the closest Regional Loan Center near you plus contact phone numbers and other details at http://www.benefits.va.gov/homeloans/rlcweb.asp