VA loan rules include instructions to the financial institution regarding the types of fees and charges that can be levied as part of the VA loan transaction.
Did you know there are some fees that are permitted as “itemized fees” and some that are included in the lender’s one percent flat fee? These cannot be charged twice--the VA has rules that don’t allow the lender to double-charge the borrower--and there are some itemized fees the bank cannot pass along to the buyer as they are considered a customary part of the bank’s business offering VA home loans. In some cases the expense of this business must be paid for out of the lender’s flat fee.
For example, the lender cannot pass along itemized legal fees it pays for retaining legal services in connection with drawing up legally binding contracts for VA borrowers. The borrower would be responsible for paying for his or her own lawyer should it be deemed necessary to retain one. But the bank’s decision to hire counsel is the lender’s own expense.
The borrower can be charged for required surveys, appraisals, flood zone determination, hazard insurance and more. But you cannot be charged if a flood zone determination has already been made on the property--only if one did not exist and needed to be accomplished now.
The borrower could be charged for title examinations and/or title insurance. These would all be considered itemized fees. Another fee, the lender’s flat charge, is designed to cover fees and expenses not listed in the itemized list.
What is included in the lender’s flat fee? According to VA loan rules, the following list includes (but is not limited to) the following which may be paid for by the lender out of this fee:
- 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
- interest rate lock-in fees
- 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.
Ask your loan officer about applicable VA loan fees and expenses as they apply to your VA home loan.