By: Grant Moon 08/05/14 10:49 am VA home loans require no down payment. If you like to save money, the VA IRRRL is a loan option to think about. It’s important to keep in mind that there will be additional costs associated with closing on your home. Seller agrees to pay up to The cost varies depending on the type of military service, the size of your down payment and whether it’s your first time using the loan program. VA IRRRLs are guaranteed to a minimum of 25% of the loan. According to VA guidelines, the 4% rule applies to the following items a seller is allowed to pay for a buyer on top of traditional closing costs: These can be done NO cost right now at 3.5%, up from 3.25% after the election. But it might benefit you in the long run. No money out of pocket is required – homeowners can include all refinancing costs in the loan, or by choosing to receive negative points to allow the lender to cover the closing costs. If you are a first time homebuyer, you’re probably aware that you need to save money for a down payment, but you may not realize the full costs associated with closing, and they typically run anywhere between 3 – 6 percent* of your approved loan amount. The VA IRRRL Is Designed to Save You Money! Below is a list of the fees you can expect to see on a VA loan, as well as some critical notes for certain fees. No prepayment penalties. Some fixer-uppers can be challenging to make work for VA loans. In Chapter 6 of the VA Lender's Handbook you'll find the following guidelines: "The following fees and charges may be included in an IRRRL; the VA funding fee, and all allowable closing costs, including the lender's flat charge." When you factor in the loan amount, the funding fee, and the total interest paid, the entire cost of the VA loan is $272,013.So you’re paying more over the course of the 15-year term compared to a conventional mortgage. The seller is allowed to pay up to 4 percent of the sales price. Why You’re Better Off Paying Closing Costs in Cash. With a 15-year fixed-rate conventional loan, your total interest paid is $48,156—that’s almost $20,000 less than what you would pay in the VA loan example!. Not only will you pay closing costs; you’ll also pay the funding fee. VA loans are assumable — The Mortgage Report explains that assumable loans mean if you decide to sell your home, you can transfer your VA loan to the buyer, as long as they are also eligible for a VA loan. 2. Disadvantages of the VA Loan: One of the major disadvantages of a VA loan is the inclusion of a funding fee. If you have a few credit issues or need more stable income, you can work on those factors and then apply for the loan. WE did about $140 million this year paying the closing costs as well as the funding fees for a true no cost refinance. The buyer can negotiate the closing costs as part of the sales contract, offering to pay a certain price for the home if the seller agrees to pay for the closing costs. When it comes to qualifying for the second VA loan, you can cancel out your mortgage payment on the property you turn into a rental as long as: You have a lease for at least 12 months; You have a security deposit; You are not leasing the home to a family member (cheating!) What options do VA home buyers have when this occurs? This means the VA home buyer needs to make up the $10,000 difference. Learn about VA home loan limits (also called VA home loan maximums). The VA loan funding fee is lower for those who choose to make a down payment. These 10 lenders — experts at VA loans — are among the best for a VA streamline refinance, ... you can add the closing costs to your loan balance or accept a higher interest rate to pay for them. 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