This is the first part in a series aimed at educating potential borrowers on various aspects of an Illinois VA mortgage loan. Part 1 discusses the various closing costs associated with a VA home loan.
Appraisals and Inspections
The appraisal is a report completed by a certified residential appraiser to determine the market value of the home. An inspection is done to determine if there are any structural problems with the home or potential problems with the plumbing, electrical system, heating and air condition, and the general maintenance of the home.
Recording Fee
These are the fees associated with recording the mortgage at the local county records office.
Hazard Insurance
Most lenders will require an escrow account be set up to take care of the yearly homeowner’s insurance. This amount is divided into twelve parts so that the borrower can make small payments on it each month.
Title Insurance and Examination
This is a service performed by an attorney to ensure that the ownership of the home passes correctly from the current owner to the new buyer. The title insurance is not insurance on the home. Instead it is an insurance policy that protects the buyer in the event a mistake was made in the title process and an old lien holder attempts to collect on the property.
Funding Fee
This is a fee required on all Illinois VA loans unless you are exempt (see VA Funding Fee Exemption Expanded in 2010 for additional information). The percentages are different for a purchase mortgage compared to a refinance mortgage. These fees will be discussed in detail in a later post.
There may be additional fees/taxes depending on where the property is located.
The next part of the series will discuss the debt to income ratios used by VA lenders to approve borrowers for a loan.
For additional information, visit our VA loan page of our website. If you have questions or want to see if you qualify, contact me below or apply online!
