I’m Closing on My Mortgage: Now What?
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Few steps in life are more important than becoming a homeowner, and now you’re ready to make the jump yourself. You’ve found a place you love, you’ve been approved for a loan, and all that’s left is to close on your VA mortgage.
While that may seem like a simple step, there are many moving parts you need to be aware of, as a number of things could hold off the closing. Here’s what you need to know about VA loans before you can officially say that you closed on your mortgage.
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Mortgage closing is when all parties involved sign the necessary documents (and there are a lot of documents!). After closing on a mortgage, you are now responsible for the mortgage loan and legally required to repay it.
Depending on where you live, the closing may involve a variety of parties, including a real estate agent, your title insurance company, an escrow company, attorneys, and even your lender. The relevant parties might sign the documents at the same time or separately, and electronically, by mail or online.
Depending on the agreements, you can typically move into your new home immediately after the closing appointment. In some cases, however, the seller may request up to 60 days of occupancy.
VA Loan Closing Costs
There are some common loan-related closing costs that come with a VA Loan that differ from normal closing costs, including:
- Origination charge. The origination charge is a 1% fee that covers the lender’s costs that come with originating the loan. With a VA loan, a lender charging that fee is not allowed to add further charges or overhead, including things like application and processing fees, interest rate lock-in fees, tax service fees, or even postage costs. Lenders can choose to charge you a flat 1% or pick and choose which fees to charge, as long as they cost no more than that 1%.
- Appraisal fee. All VA buyers must get a home appraisal. Much like everything else associated with real estate, appraisal costs vary from state to state. Those costs are normally set by the lender. However, with a VA loan, the VA sets the cost and the buyer must pay it up-front.
- Discount points or permanent buydown. If you’re a buyer with a VA loan, you can pay points to lower your insurance rate. A point is basically 1% of your loan amount. It’s a completely optional step, but super helpful if you have some extra money saved to put up front. It pays off in the long run.
- Credit report fees. The VA prevents lenders from charging any more than $50 to access your credit information.
- Select inspection fees. In all but nine states, VA buyers are not allowed to be charged for termite inspection, but they may be allowed to pay for repairs associated with wells, septic systems, or found termite issues.
- Closing costs. A big benefit that comes with a VA loan is that the seller can pay all of your loan-related closing costs. Sellers aren’t required to pay any of them, but it’s something you can consider adding to the negotiations.
- Concessions. The VA describes seller concessions as anything added to the transaction by the builder or seller that has value but for which the buyer pays nothing additional. As part of your negotiations, you can ask the seller to pay up to 4% of the purchase price. As long as you stick to that number, you can ask for whatever concessions you’d like.
- VA funding fee. This is a mandatory charge that goes directly to the VA to keep the loan program running. Think of it as paying it forward. For most first-time buyers, this fee is 2.30% of your loan if you’re not making a down payment. This fee is the only closing cost you may roll into your loan. Bear in mind that you can ask the seller to pay it (but that would make it part of the 4% concession) or you could negotiate a lower purchase price to accommodate for and offset that fee.
Milestones Toward Closing
Aside from being prepared to pay the various costs associated with closing on a mortgage, there are several steps that serve as major mile markers along the road to closing. They include:
- Have a VA appraisal done. This process ensures the price you’re paying for the home matches with its current value. The Department of Veterans Affairs stipulates that such appraisals be conducted within 10 days from the time it’s ordered to the time it’s completed. The report will go to your VA-approved lender.
- Get a home inspection. The home must meet the VA’s minimum property requirements (MPRs), so you’ll need to find a home inspector who is versed in VA requirements to take a close look at the home, keeping an eye out for things like code violations and major defects. Based on the resulting inspection report, you may be able to ask that the seller perform certain repairs as a condition of the sale.
- Comply with underwriting requests. The underwriting process takes place simultaneously with necessary appraisals and inspections. You’ll want to keep a close eye on your email, as your lender may request significantly more documentation than was needed for your loan pre-approval. Plus, they may have questions about your financials and employment that must be addressed before you can be cleared to close on the property.
- Review closing disclosures. Three days before closing, you’ll receive documentation that includes all your loan fees and costs. This replaces the truth-in-lending statement and the HUD-1 settlement statement.
Choose Hero Loan for Your VA Loan Closing
Hero Loan is ready to help you close on your dream home. Since we’re a direct-endorsed VA lender, we can provide you with a much quicker turnaround time for your loan. While most lenders can take up to 60 days to complete the VA loan process, we can close in as little as 14 days!
The Hero Loan team simplifies the process for you every step of the way, handling all the paperwork for you, including that first big step: the VA Loan Certificate of Eligibility. We also underwrite all our VA loans in-house for lower mortgage rates and no up-front or out-of-pocket costs, including the appraisal.
Are you ready to get started with your VA loan process? Contact us today!