5 Facts About VA Funding Fees
A VA loan is a mortgage loan that the Department of Veterans Affairs backs, but traditional lenders issue the loans. When you have the right military experience, you might qualify for a VA loan. You must meet the guidelines that lenders have for these loans, though. One thing you must know about VA loans is that they require paying a funding fee. Here are five facts about funding fees that you should know if you want to get a VA loan.
1. The VA Guarantees the Loans
When you see loan types with an entity backing them, it means that the entity guarantees them. With VA loans, it is the VA that guarantees the loans. Lenders still have eligibility guidelines that borrowers must meet, but the VA pays the deficiencies if borrowers default on their loans. The funding fee that borrowers pay helps the VA pay these deficiencies.
2. The Fee Rate Varies
The funding fee rate varies. The fee rate you pay depends on several things, including the amount you use for your down payment.
3. It Is a One-Time Fee
The third fact to know is that the fee is a one-time deal. You only pay this fee once when you get a loan. It is not an ongoing fee that you must pay each month. Once you pay it, you no longer have to worry about it.
4. You Can Pay It in Different Ways
The next thing to know is that you can pay the fee in different ways. The first way is by paying it with cash when you get the loan. The second option is to include the amount in your loan and pay the fee over time. Both options work well, but the first option helps you keep your mortgage payments lower.
5. Some Borrowers Do Not Pay It
The final thing to know is that there are people who do not have to pay the funding fee. You must pay it unless you qualify to have it waived. To qualify for this, you must meet certain conditions. For example, you can get out of paying it if you have a disability from serving in the military and are on disability benefits.
Knowing the facts about VA loan funding fees is essential if you want to get a VA loan. To apply for a loan, contact a lender that offers VA loan services.
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