You know that feeling you had as a kid when you went to buy a candy bar? You had exactly .25 cents, so you had to choose carefully. The king size bars were .50 cents – that was too much. You could buy two packages of gum for .10 cents each, but then you would have .05 cents leftover. You finally decided on the .25 cent chocolate bar. With your mouth already watering, you went to the register to pay. The cashier slid the candy across the scanner and said, “With tax, that’ll be .27 cents.” You looked down at the two dimes and the nickel lying in your open hand and your stomach sank.
Many first time home buyers are unpleasantly surprised when they learn about something called closing costs. To get a loan you and/or the borrower pay for the services that ultimately get your loan funded and closed.
So what are closing costs?
There are many possible services and fees that can make up the closing costs for a mortgage, and they can vary from person to person. Some pretty common closing costs come from things like origination, underwriting, notary, attorney, and recording fees. They also come from title policies, transfer taxes, and appraisal and inspection costs.
If you’re feeling a bit deflated right now, STOP! If you qualify to use your VA benefits to secure a mortgage, then you’re in luck.
VA qualified borrowers pay only a fraction of the closing costs, and pass the rest onto the seller. Usually, the seller will end up paying at least the majority of the closing costs as long as they don’t add up to more than 6 percent of the loan amount.
Occasionally a seller may be reluctant to sell under the VA’s strict rules for who pays closing costs. In order to sweeten the deal, you may be able to increase your offer to offset the closing costs. If you do increase your offer, it will need to work within your preapproval amount and the home appraisal.
We know you don’t want to end up pennies short when it’s time to close the deal. Using your VA benefit is a great way to make sure that doesn’t happen.
Creekside Mortgage, Inc is happy to help you with all your VA loan needs. Give us a call today at 800.920.5420.