When buying a home with a VA mortgage, there are a range of fees and expenses a borrower should expect to pay, and then there are fees that could be paid depending on the type of home loan, the state or housing market that loan is issued in, etc.
The VA has some requirements that govern these types of expenses; one good example of that is when a third party renders a service as part of the VA loan. The only amount the borrower may be charged for such services is the actual cost of those services--no surcharges or extra fees can be tacked on by the lender.
Some other types of expenses a borrower should anticipate “just in case” include the following:
Title Examination and Title Insurance
The borrower may be required to pay a fee for title examination and title insurance, if warranted. VA loan rules explain this in VA Pamphlet 26-7, Chapter Eight.
Mortgage Electronic Registration System (MERS) Fee
VA loan rules state, “The veteran may pay a fee for MERS. MERS is a one-time fee for the purpose of electronically tracking the ownership of the beneficial interest in a loan and its servicing rights.”
Special Mailing Fees for Refinancing Loans
For refinancing loans only, VA loan rules permit the borrower to be charged for costs associated with using Federal Express, Express Mail, or a similar service, “when the saved per diem interest cost to the veteran will exceed the cost of the special handling.”
“Other” Fees Authorized By The Department of Veterans Affairs
VA loan rules for “other” or “additional” fees are addressed in Chapter Eight of VA Pamphlet 26-7, which states clearly, “Additional fees attributable to local variances may be charged to the veteran only if specifically authorized by VA. The lender may submit a written request to the Regional Loan Center for approval if the fee is normally paid by the borrower in a particular jurisdiction and considered reasonable and customary in the jurisdiction.”
The phrase “reasonable and customary” is key in that paragraph. While that may be open to interpretation, the VA has the final say when it comes to that interpretation as it applies to the rules in Chapter eight.