Understanding the closing costs you might incur when buying your Eugene, OR home is key to a smooth house buying experience. Closing costs vary depending on the kind of mortgage you select. Here are the typical VA loan closing costs that you’ll need to cover before receiving the keys to your new home.

VA Home Loans Come with Big Benefits

VA home loans carry significant benefits for buyers who qualify. Examples of perks that make exploring a VA-backed mortgage worthwhile include:

  • No down payment
  • Competitive interest rates
  • Generous credit score requirements
  • No private mortgage insurance requirement

A significant benefit of using a VA home loan to buy your house is the lack of a down payment requirement. You’ll save thousands of dollars up-front by skipping a down payment. Rolling the money you would have used for a down payment into monthly mortgage payments helps make buying a house more affordable.

Still, there’s no avoiding the fact that closing on a VA home loan requires some cash. Closing costs are an unavoidable part of the home buying process. Let’s examine the VA loan closing costs you can expect to see when you buy your dream home.

VA Loan Closing Costs

VA loan closing costs average anywhere from three to five percent of the total amount of the mortgage. So, for example, you might pay as much as fifteen thousand dollars to close on a three hundred thousand dollar mortgage.

Closing costs add up to a significant hit on your wallet because the bill includes multiple charges. The balance due to finalize your home loan generally includes expenses for the following items outlined below.

VA Funding Fee

The amount you’ll pay for the VA funding fee varies according to your circumstances. You can pay this fee as a part of your closing costs or throughout the life of the mortgage.

Loan Origination Fee

You’ll pay the lender to process the loan application. Within the application fees, you’ll pay for such things as the cost to obtain your credit score and to complete all the underwriting necessary for the loan. The loan origination fee can’t exceed one percent of the loan amount.

Home Appraisal

A successful home appraisal is critical to obtaining a VA home loan. The appraiser evaluates the property to determine the current market value and the overall condition of the property.

Insurance and Taxes

On top of the above fees, expect your closing costs to include fees for home insurance and property taxes.

Title Insurance

Your lender wants to make sure there aren’t any problems regarding the ownership of the property. Thus, you’ll pay for title insurance to protect both you and your lender in case things like liens and property line disputes arise after you purchase your house.

VA Loan Closing Costs vs. Conventional Closing Costs

Are you wondering if taking out a conventional home loan might lead to fewer closing costs? The answer is that you probably won’t save money where it counts. While you won’t face charges for a VA funding fee and a VA home appraisal, you’ll likely pay for private mortgage insurance.

Lenders usually want you to come up with a significant down payment to qualify for a conventional home loan. If you can’t invest approximately twenty percent of a home’s sales price into a down payment, private mortgage insurance (PMI) may become part of your monthly mortgage payment. Unfortunately, PMI payments can continue for a long time and cost you a substantial amount of money.

Limit VA Loan Closing Costs

Bearing responsibility for thousands of dollars in closing costs can feel overwhelming. However, there are ways to minimize the amount that you’ll owe when you finalize the purchase. Here are two time-tested tips that are sure to help keep closing costs in check.

Don’t Settle on the First Lender That Offers You a Mortgage

VA loan closing costs vary across financial institutions. Comparing the loan numbers from multiple lenders aids you in finding lower loan fees.

Work With the Home Seller to See If They Will Help Pay for Closing Costs

Keep in mind that today’s seller-friendly housing market gives buyers less negotiating power. Still, a seller might be interested in picking up some closing expenses in exchange for things like a higher sales price.

Last Thoughts

Lastly, take the time to meet with multiple lenders when searching for a VA mortgage. You’ll find the most advantageous terms and closing costs. Once you choose a lender, set aside enough funds to cover your VA loan closing costs so that you’ll enjoy a less stressful homebuying experience.

The VA home loan experts at Eugene’s Strategic Mortgage Solutions strive to match you with mortgages that help homeownership fit your budget. Contact us to discuss your home loan options today.