Important tips for VA (Veterans Administration) Loans
VA loans are a great option for buyers. In addition to low interest rates, VA Loans enable a purchaser to buy a home with no down payment and no mortgage insurance. In our area, with the high number of active military and veterans, you will very likely encounter a buyer who chooses to obtain a VA loan.
Whether you are representing the buyer or seller, you should be aware of a number of important items when writing the contract. Knowing upfront what is allowed will prevent unexpected charges and benefit both you and your client:
1) Broker Fees or Administration charges: Broker fees or administration charges are NOT allowed to be charged on the HUD-1. Most Agents know this upfront and expect to pay this fee out of their commission. In some cases, if there is a seller closing cost credit, the buyer can request that the seller pay the Selling Agent Broker Fee on the HUD-1 and reduce the closing credit by the same amount. Most lenders allow this to be shown on the HUD-1 because there is no charge to the buyer.
2) Termite Inspection: The buyer CANNOT pay for the termite inspection. This is specified in the contract, as well as in the VA Financing Addendum. If you represent the seller, please point this out to them so they are not surprised to see this charge on the HUD-1.
3) VA Financing Addendum: This form (GCAAR Form #1338) is required when the purchaser is obtaining a VA loan. The form provides the financing contingency as well as provisions related to the appraisal of the property. Please review this addendum carefully with your clients.
4) Seller paid repair items: It is not uncommon for a lender to require certain repairs to be made to the property. The VA Financing Addendum provides for the buyer to deliver Notice requesting repairs to be made by the seller. The Seller then has the option to agree to the request. If there is no agreement and the buyer chooses to not make the repairs, then the contract will become void.
DISCLAIMER: This information is intended for educational purposes only and does not constitute legal advice. You should not rely or act upon any information contained in this article without seeking the advice of qualified legal counsel.