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10.1
HOW
FHA AND VA FINANCING AFFECTS YOUR OFFER
Extra
costs for the seller
If you are obtaining
a VA or FHA loan in order to finance your purchase, you must include
that information in your offer. This is because government loans
place additional financial and performance obligations on the seller.
Non-allowable
fees
First, VA and
FHA loans prohibit buyers from paying certain types of fees that
are often charged by lenders, escrow companies, settlement agents,
and title companies. They are called "non-allowable" fees. They
still get charged anyway, but as the buyer, you are "not allowed"
to pay them. The result is that the seller ends up paying them instead
of you.
Most of these
"non-allowable" fees come from your lender. By the time you are
making an offer you should have already been pre-qualified by a
loan officer, so you or your real estate agent can ask how much
the lender’s non-allowable fees will be. Experienced agents should
also have an idea of what non-allowable fees will be charged by
the escrow or settlement agent and the title insurance company.
Since these
are fees the seller would not pay on an offer with conventional
financing, this information must be included in your offer. You
should also realize that since the seller will be paying these additional
fees, they may be a little less negotiable on the price.
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