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How to Get Around Closing Costs When You Get a VA Loan To Purchase in California

by rob on January 14, 2010

When you get a VA loan to purchase a house the great thing is your are getting 100% financing, there is no down payment.   This is the #1 of many VA loan benefits available only to veterans and active military.  There is no other mainstream loan available that is 100% financing no money down.

However, when you get a VA loan to purchase a home, there are still closing costs to be paid.  These VA loan closing costs are items such as:

  • Escrow fees
  • Title insurance
  • Home insurance premium
  • Property tax reserves collected by the lender
  • Interest for the remainder of the month your are closing in
  • Lender fees
  • Appraisal fees
  • Home inspection fees

First off, one great thing with VA lending is that when you get a VA loan, the seller must pay the escrow fee and the lenders processing and underwriting fee.  Those are fees the VA borrower is not allowed to pay.  However, there are still a significant amount of closing costs that remain that will have to be paid before closing on your house.  Sometimes as much as 2-3% of the loan amount.   There are still some ways to get around having to come out of your own pocket for closing costs.  The #1 best way is to ask the seller to credit you 3% of the purchase price for closing costs.  You can work with your real estate agent to write this into your purchase offer.  If you can negotiate this, then you can have a no money down 100% loan AND not have to pay ANY closing costs!  The nickname for this loan is the VA “no-no”.  No money down, no closing costs.

Some other nice advantages of VA homeloans:

  • To qualify for a VA Loan credit does not have to be perfect, even if you think you have bad credit you may still qualify for a VA loan
  • 100% financing with VA lending – VA offers the only zero down loans today
  • VA loan interest rates are at historic lows – the U.S. Government is artificially pushing down rates to stimulate the economy so take advantage of it while you can!
  • $8,000 home buyer tax credit available until April 2010!
  • VA homeloans allow the seller to credit you for all of your closing costs – so this + 100% financing means you can buy with almost no money out of pocket

Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and VA specialist)

858-922-7899

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