What is Negotiable on VA Home Loans?
You’ve heard it before, right? Everything is negotiable. The price of a car, the price of a home, but a VA loan? Surprisingly, there are some things that can be negotiated but there’s a catch: those negotiations will have the most success with your VA lender.
When you first apply for a VA home loan you’ll receive what is called the Good Faith Estimate of Settlement Charges. A lender is required to issue this completed form to you when you have completed a loan application with them and have identified a property.
You will notice a variety of itemized charges on this form, including charges for Origination fees, appraisal, credit report, etc. These items are sometimes called the “800” series as the fees are itemized by “801, 802…” and so on. These are fees directly from or ordered by the VA lender on your behalf.
You will also notice a number of other charges on this closing cost estimate associated with your VA loan including title insurance and homeowners insurance and a host of other required fees. The only fees however that a lender can negotiate are the ones that they are responsible for. And in addition, there are fees that the veteran is not allowed to pay such as lender underwriting charges or attorney fees. These fees won’t be charged to you as the VA home loan prohibits certain closing costs that you may pay.
What is negotiable, and most important, with your VA loan is your interest rate. Interest rates from your lender will vary depending upon how many, if any, discount points are included with the rate being offered. A discount point is represented as one percent of the loan amount and is used to lower, or discount, your rate. For example, you may be quoted a 3.50 percent rate with one discount point or 3.25 percent with two discount points. 3.75 percent may also be available with no discount points.
It’s up to you and your VA lender to decide which rate choice best suits your requirements but it is indeed within your right to negotiate the absolute best rate and point combination you can get. After all, you’ll be the one making the payments every month, not your lender.