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By November 28, 2011 0 Comments Read More →

VA Funding Fees Set Through September 2016

Military homebuyers finally got some clarity this week regarding the VA Funding Fee, a mandatory governmental charge applied to all VA loans that has been in a legislative limbo.

The fee helps fund the VA Loan Guaranty program and ensures this long-cherished lending mechanism remains outside any Congressional appropriations process. Confusion took root this fall when the long-time rates were set to decrease at the end of September.

After weeks of political wrangling, President Obama signed a bill Monday that included a provision to retain the familiar (and higher) funding fees through September 2016.

Continuing to apply those fee levels will ensure the VA loan program remains fiscally independent and can continue to provide home loan guarantees for America’s military borrowers. The agency backed more than 357,000 loans in fiscal year 2011, a 14-percent increase from last fiscal year.

Uncertainty regarding the Funding Fee proved especially confusing for homebuyers waiting to close these last few weeks. The VA issued several circulars and provided some final clarity Tuesday, a day after the bill’s signing.


VA borrowers who closed from Nov. 18-21 will pay the lower Funding Fees. But neither lenders nor borrowers will be on the hook for the difference now that the former, higher fees are back in place.

Moving forward, all VA loans will revert back to the familiar Funding Fee levels, at least through the fall of 2016. Prospective homebuyers with service-connected disabilities are exempt from paying the fee. Most VA homeowners choose to roll the fee into their overall loan amount, adding a few extra dollars to each month’s mortgage payment.

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About the author: Chris Birk writes about real estate and the mortgage industry for a host of sites and publications, from Lenderama and Bigger Pockets to the Huffington Post and Motley Fool. A former newspaper and magazine writer, he is also content director for a leading VA lender. Follow him on Google+.

 

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