With the amount of military in this area, the VA Loan that is offered to service members is a great way to purchase a home. VA loans have offered no down payments on purchases since 1944, which is such an upside versus a conventional loan or even FHA loans that require anywhere between 3-20% on the total amount of your loan. However, keep in mind that you still may have to have some money put aside to finish all of the requirements for the deal. Here is a list of things to keep in mind while purchasing your new home through the VA loan, just to make sure that you aren't blindsided when or if you are in need of some funds in the process.
1. There's a small fee oftentimes by lenders for a credit check when applying for your loan.
2. Earnest money deposits (EMD) are required as a type of consideration for the purchase of a home. It lets the buyer know that you are serious in your efforts to close the deal. It can vary in percentages based on the market and the price of the home and also how much you want your offer to appeal to the seller. The money will go to the purchase of the home or to the closing costs, or even can be refunded to you after the closing of the home if you so choose, however, it looks better to the buyer if they know you have the extra money to set aside to secure the home for the appraisal and closing process.
3. Appraisals are required through the VA to ensure the value of the property is up to par with the market price of the home and also that the property passes all of the standards and requirements expected by this type of loan. Buyers typically have to come up with the money for the appraisal up front, though they may be able to take the price off at closing.
4. Home inspections are another requirement that you may have to come out of pocket for which aren't overly expensive, but just something to keep in mind that you may have to pay for. But are crucial, and can end up saving you thousands if the inspector uncovers a problem in the property that you would have had to fix after the fact.
5. Recording fees are a fee that you pay to the county where you newly reside to record your mortgage in the public record. This is a fee that must be paid for out of pocket at the time of closing and varies from county to county.
6. Real estate transfer taxes- these are costs that vary from state to state, county to county, but are taxes collected to transfer the title of the property from the old owner to the you-the new owner.
7. Title insurance protects you (and your lender) in the event that there are issues transferring the title from the previous owners of the home.
8. HOA fees are non applicable for every property, but if you move to a place where the home owners association charges monthly fees to maintain the area, etc.
9. Loan origination fees- these will be part of your closing costs. The VA allows lenders to charge up to 1% of the loan amount to cover origination, processing, and underwriting costs.
Just to sum it all up- even though you aren't going to have to cough up a huge down payment on your new home with the VA loan, be sure you've got some money to spare when you decide to get serious with your hunt for the perfect home for you.