The Vanishing VA Fee
One of the many benefits of the VA mortgage addresses allowable closing costs for the veteran. If this is your first home, you’ll be surprised at how many different charges there are for so many different things. Many of which you’ve never heard of before. Do you know what a document stamp is? An intangible tax? An escrow charge? Depending upon where you live these may be loan fees necessary to close a VA mortgage.
Your loan officer will provide you with your good faith estimate of settlement charges which itemizes all the potential charges you may incur when buying a particular house. But what happens if things change and the loan doesn’t go through?
A VA mortgage can be cancelled for a variety of reasons. For example, say that you apply for a VA mortgage loan to get your pre-approval and then you go shopping. You find a home that you like and make an offer. Once a buyer and a seller have a signed sales contract, the wheels begin to turn. Upon inspection, you find out that the foundation is in dire need of repair so you cancel the deal. To get your inspection, you had to pay a home inspector. If the deal falls through, do you get your home inspection money back? Unfortunately, no.
Now let’s say the inspection went just fine and your lender needs to order an appraisal. You will likely be asked to pay for your appraisal upfront, typically about $450, depending upon the type of property and other factors. If the appraisal comes in lower than the sales price you have the option of pulling out of the deal. Do you get your appraisal money back? Again, no.
Okay, now let’s say your appraisal does come in at the proper amount and you proceed. You’ll notice all the other charges such as title insurance listed on your good faith estimate are still pending; they won’t be collected until you get to the closing table. But what happens one week before closing and something dramatic has occurred that cancels the deal in its entirety. Do you have to pay for the outstanding items that are listed on your closing cost estimate?
No, you don’t. If the deal doesn’t close, for whatever reason, you’re not obligated to pay for any remaining charges yet to be performed. If the loan doesn’t close, you’re off the hook.