does the seller have to pay the closing costs if the buyer is doing a VA loan?

Asked by Dmccoy07, Oklahoma City, OK Sun Apr 12, 2009

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11
Jennifer Bla…, Agent, Owasso, OK
Fri Jul 23, 2010
Perhaps the buyer that is interested in your home NEEDs seller to pay his closing costs in order to be able to purchase a home. However, it is NOT a rule that seller must pay buyers closing costs. Seller does have his own costs and Buyer has his own costs. It's very, very commom in todays market that sellers pay a portion of buyers closing costs but not a definite.

Good Luck!

Jennifer Henning
1 vote
Abe Mills, Agent, Greenville, SC
Tue Aug 11, 2009
I am amazed at the answers from agents who are just simply guessing at questions like this. The VA does not require the seller to pay closing costs at all, and no where will you find it otherwise. Typically, and I'm using the term broadly, the sellers do pay the closing costs in a VA loan, because the VA does allow it. However, it is not required.

Good Luck!
Web Reference:  http://www.abemills.com
1 vote
David Chambe…, , Saint Petersburg, FL
Tue Aug 11, 2009
Here are some highlights about the Va guaranteed loan and purchaseshould you choose to :
accept a VA contract.

Veterans' closing costs are limited by VA

The contract must also allow the veteran to "escape" from the contract without penalty if he/she is unable to obtain a VA loan.

The seller can pay for closing costs. There is a requirement that seller concessions do not exceed 4%, but only certain items are considered as part of the concession; i.e., payment of pre-paids, VA funding fee, payoff of credit balances or judgments on behalf of the veteran, funds for temporary buydowns (not discount points).

The veteran is not allowed to pay for the wood destroying insect (termite) report; it is generally paid by the seller.

An appraisal is required to help ensure that any property which will become the security for a VA-guaranteed loan

• has a value of at least as much as the loan amount, and
• is in a condition acceptable to VA.

Property in a badly deteriorated condition is not eligible for appraisal unless VA agrees there is a reasonable likelihood that it can be repaired to meet VA Minimum Property Requirements (MPRs) prior to loan closing.

The veteran can pay a maximum of:

• reasonable and customary amounts for any or all of the “Itemized Fees and Charges” designated by VA, plus
• a 1 percent flat charge by the lender, plus
• reasonable discount points.
• The veteran can pay the fee of a VA appraiser and VA compliance inspectors.
• The veteran can also pay for a second appraisal if he or she is requesting reconsideration of value.
• The veteran cannot pay for an appraisal requested by the lender or seller for reconsideration of value.
• The veteran cannot pay for appraisals requested by parties other than the veteran or lender.


Recording Fees The veteran can pay for recording fees and recording taxes or other charges incident to recordation.
Credit Report The veteran can pay for the credit report obtained by the lender.
For Automated Underwriting cases, the veteran may pay the evaluation fee of $50 in lieu of the charge for a credit report. For “Refer” cases, the veteran may also pay the charge for a merged credit report, if required.
Prepaid Items The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account.
Hazard Insurance The veteran can pay the required hazard insurance premium. This includes flood insurance, if required.
Flood Zone Determina-tion The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination.

The veteran can pay a charge for a life-of-the-loan flood determination service purchased at the time of loan origination.
A fee may not be charged for a flood zone determination made by the lender or a VA appraiser.
Survey The veteran can pay a charge for a survey, if required by the lender or veteran.

Any charge for a survey in connection with a condominium loan must have the prior approval of VA.
Continued on next page

2. Fees and Charges the Veteran-Borrower Can Pay, Continued

c. Itemized Fees and Charges (continued)


Title Examination and Title Insurance The veteran may pay a fee for title examination and title insurance, if any.

If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.
Special Mailing Fees for Refinancing Loans For refinancing loans only, the veteran can pay charges for Federal Express, Express Mail, or a similar service when the saved per diem interest cost to the veteran willexceed the cost of the special handling.
VA Funding Fee Unless exempt from the fee, each veteran must pay a funding fee to VA.
Mortgage Electronic Registration System (MERS) Fee 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.
Other Fees Authorized by VA 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 RLC for approval if the fee is normally paid by the borrower in a particular jurisdiction and considered reasonable and customary in the jurisdiction.

Whenever the charge relates to services performed by a third party, the amount paid by the borrower must be limited to the actual charge of that third party.

That is all it would let me put in here you can get more information here :http://www.homeloans.va.gov/
and on my blog: http://www.trulia.com/blog/david_chamberlain/2009/08/what_fi…
0 votes
Equity Homes…, Agent, Oklahoma City, OK
Tue Aug 11, 2009
I do a lot of VA loans and it is true that the seller does not have to pay closing costs but they usually do with the exception of the termite cert and the closing fee to the title company.
0 votes
Equity Homes…, Agent, Oklahoma City, OK
Tue Aug 11, 2009
According to BOK, I understand the only buyer fee that a VA cannot pay is the termite and the closing fee to the title company; however other lenders have told me that a VA buyer may not pay processing fees charged by a lender. Regardless, most VA buyers will want the seller to pay all of their closing costs and truly most sellers are willing to do so in order to get there home sold. When I list a home I always talk to the seller and explain that you should expect to be asked to pay buyer's closing costs regardless whether it is a VA or FHA loan which is the majority of ways people are buying homes today. It is the market. Good luck. Look at the bottom $$ that you are netting and decide if you can live with that amount and then accept or decline the offer without focusing so much on all the fees.
If you have a $100K house and someone offers you $100K with you paying $3k in closing costs is it any different than offering you $97k. So if you are happy with 97k why do you care how you get there. Hope this helps.
0 votes
Dorene Slavi…, Agent, Torrance, CA
Tue Aug 4, 2009
Dear DM,
No the seller doesn't "have to " pay closing costs. It's very common for sellers to do this, however, because many buyers cannot cover the additional closing costs (home prices being what they are these days)
0 votes
Debbie Ashton, , Oklahoma City, OK
Tue Aug 4, 2009
VA loans are becoming more and more prevalent throughout the US - 1/3 of the American buying public now has VA eligabiity.....VA is a great program for Vets and sellers alike.
0 votes
Jace Thoreson, , Edmond, OK
Mon Apr 13, 2009
If you accept a contract from a buyer who is purchasing with a VA loan there are closing costs that are required to be paid for the buyer, by the seller. At the bottom of the financing page the items are listed under non-allowables. The only way to have them buy the home and not pay those costs is if they go with a different loan, but if they qualify for a VA loan they will more than likely want to use it. Keep in mind that there are over 9,000 homes in the OKC metro that a buyer can choose from and look at how many months is may be if this buyer decides to purchase another home. Most times if it takes more than a month to get another buyer you've already paid more than you would in the non-allowables.
Web Reference:  http://www.OKLocations.com
0 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Sun Apr 12, 2009
You don't have accept a contract that requires you paying any closing costs. You don't have to accept a contract at all. But, if you've got a good contract, focus on the net you'll be getting after the closing cost assistance, don't get caught up on principal.
0 votes
Suzanne Walk…, Agent, Oklahoma City, OK
Sun Apr 12, 2009
I agree with Dp2, but if you are referring to non-allowables then 'yes' the seller must pay all of the buyer's (vet) non-allowables which can vary in amount depending on who their lending institution is. The buyer's lender should be able to provide a good estimate of what the non-allowables will cost the seller. The VA Guaranteed Loan supplement agreement to the contract goes into depth about this. However, a seller does not have to accept to a contract with a VA guranteed loan, thus the disclosure.

Definitely consult with your agent and/or attorney.

Best of luck,
Susan Walker
Web Reference:  http://www.youropenhouse.us
0 votes
Dp2, , Virginia
Sun Apr 12, 2009
I could answer this question a few different ways. Although the seller technically never 'has' to pay closing costs, many sellers are paying them now to help entice buyers to buy their properties. So, you should probably check with your listing agent to see how many sellers (who sold properties in your neighborhood within the past 3 months) paid the closing closts. The higher the number, the more likely that you probably should do it too.
0 votes
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