What is the VA Loan Origination Fee?
Before borrowing for your mortgage, it’s important to understand origination fees. Choosing a lender to fund your VA home purchase loan or cash out refinance is a major decision that will impact how much money you will have to pay at closing. In this article, we will answer the question, What is the VA Loan Origination Fee?
When considering different mortgage lenders, one important factor to be aware of is what fees they will charge you. One of the fees mortgage lenders will charge you is the VA loan origination fee. A general description of loan origination fees will help you fully understand what they are and how they impact the cost of financing your VA home loan.
For any remaining questions on origination fees, call our VA loan experts at 800-720-0250. We will be able to review your application and quickly provide you with a free quote.
What is the VA Loan Origination Fee?
When obtaining a VA home loan, the loan origination fee is what the lender charges you in order to process your loan. It’s the fee you pay for the mortgage company to originate, or set up, your loan. Origination fees cover the wide range of costs mortgage lenders have when processing your loan. This includes the cost of underwriting your loan, scheduling appointments, collecting all of the necessary paperwork, and processing your application. Loan processing costs include verifying your employment, income, and assets.
The VA loan origination fee on a VA home loan is one way the lender makes money. The other way they earn money is by servicing your loan, including collecting your monthly payment and handling the escrow account. You will be required to pay the VA home loan origination fee at closing.
The VA loan origination fee is different from the VA funding fee. Veterans have to pay the funding fee to the US Department of Veterans Affairs while the origination fee is paid to an approved VA lender. The VA funding fee is charged on all VA loans by the Veterans Administration unless you are exempt.
The VA Funding Fee amount is smaller if you are doing an Interest Rate Reduction Refinance Loan (IRRRL). One way to be exempt from the funding fee if you have a service connected disability. This can save you thousands of dollars at closing because the funding fee is a percentage of the loan amount and can range from .5% to 3.6%. Call our VA loan experts today 800-720-0250 for more information about the VA funding fee.
How Are VA Loan Origination Fees Calculated?
The VA loan origination fee is set by each individual VA mortgage lender. The Veterans Administration does not decide on the amount of the origination fee. The amount is not regulated by the government. Each mortgage lender determines the loan origination fees they would like to charge in order to cover their operational costs of processing your loan.
The amount VA mortgage lenders charge varies significantly from lender to lender. Some lenders have high salaries and expensive offices that may have a big impact on their origination fee amounts.
Understanding how loan origination fees from more expensive lenders can cost you more money is important to help you make the best decision for yourself. Many veterans think they can’t save money on their origination fee but that’s not true. Loan origination fees may be called by many different names.
Some VA lenders may charge a loan processing fee, underwriting fee, commitment fee, tax service fee, lock-in fee, application fee or many other types of fees. The size of these fees matter if you are a veteran doing a VA refinance because usually these fees come out of your home equity at closing. This means that bigger lender origination fees leave you with less equity in your home after closing.
The Cost of a VA Loan Origination Fee at HomePromise
At HomePromise, we proudly offer service members, veterans, and their families’ one of the most competitive VA loan origination fees in the country. Our HomePromise VA loan origination fee is only $590, no matter the type of loan or the total loan amount. To speak with our HomePromise experts about applying for a VA loan with a small origination fee, call us at 800-720-0250 to receive a free quote.
With a better understanding of VA loan origination fees, you can avoid being overcharged for your origination fee. Many lenders charge loan origination fees of over $1,000. Some mortgage lenders charge even higher amounts, such as 1% of the total loan amount. This adds a significant amount to your closing costs. Take a look at the huge difference the origination fee can make on your closing costs below:
|
Loan
Amount |
HomePromise Origination Fee | Other Lenders 1% Origination Fee | Savings with HomePromise |
| $250,000 | $590.00 | $2.500.00 | $1,910.00 |
| $500,000 | $590.00 | $5,000.00 | $4,410.00 |
| $750,000 | $590.00 | $7,500.00 | $6.910.00 |
| $1,000,000 | $590.00 | $10,000.00 | $9.410.00 |
When is the Loan Origination Fee Paid?
The loan origination fee is usually paid at closing as part of your closing costs. But some lenders require part of the Origination Fee at the time of loan application in the form of an application fee or commitment fee. These fees are charged by some lenders even if your loan does not close. Lenders like HomePromise don’t charge application fees or commitment fees. You should always ask your lender what fees they charge and when they charge them.
Other closing costs can also include appraisal fees, title insurance, the VA funding fee, credit report changes, taxes, and surveys. Budgeting for the cost of your VA home loan origination fee is an important part of the home buying process. A VA home loan expert at HomePromise can help you estimate your costs so you can feel safe buying a home without the risk of big jump in costs at the last minute. Please call 800-720-0250 for more information.
Home buyers do have the option of asking the seller to cover the cost of their VA home loan origination fee. This is one way of decreasing your closing costs and avoiding an origination fee without increasing your interest rate. However, this must be negotiated and decided before your offer is made on a home.
Conclusion
Understanding VA loan origination fees can help you make an informed decision when choosing a mortgage lender, and it can also help save you money. When you’re ready to move forward with financing the purchase of your new home or doing a cash out refinance, turn to HomePromise as your mortgage lender. We offer military service members and veterans very competitive loan origination fees. Our VA loan origination fee is a flat $590, no matter the total loan amount.
HomePromise is approved with the U.S. Department of Veterans Affairs to provide VA home loans, whether for home buyers or existing homeowners who want to refinance. Our mission as a flexible and compassionate lender involves providing military service members with options that help save them money. We are here to help you make these important financial decisions with confidence.
HomePromise provides veterans and active duty service members with open communication over-the-phone about mortgage rates and discount points or any other questions about VA loans. Through HomePromise, you also have the option to apply online. Our VA loan experts will review your income sources, credit history, homeowner’s insurance costs and credit score to determine if you qualify for a VA loan. They will also answer any questions you may have and provide you with a free quote. Call us at 800-720-0250 to speak with one of our experts today.
How Much is the VA Funding Fee?
This type of fee is a one-time payment added onto the cost of the VA loan paid by the service member, veteran, or surviving spouse. The purpose of adding this fee to VA loans is to help cover any losses from defaulted loans. It also makes sure the program stays healthy and is still available for service members and their families in the future.