We are buying a house using a VA loan (building one, but not a construction loan) for right around 750. We went with one of the builder's preferred lenders in order to get 3% credit back to us for upgrades.
Received the disclosure statement and this is one section of it.
Loan Costs
A. Origination Charges $16,761
2% of Loan Amount (Points) $15,321
Commitment Fee $1,295
Technology Fee $145
I have no idea what the 2% thing is. The funding fee is listed in another section. I Googled origination charges and it looks like when using a VA loan the lender can charge a flat 1% fee or itemize them as long as they don't exceed 1%, so for a 750k home it wouldn't be more than $7,500 which this is more than double. Not sure if they are trying to pull something over on us due to the builder's deal or if I'm just being overly anxious and paranoid about it. We've bought 2 homes before but this is the first time using the VA loan and my Dad was in the business so always looked over everything for us with a fine tooth comb, not having him around to do that now also makes me more anxious with this whole process.
VA loan help-disclosure statement/origination charges
byu/MultiRoleMaven inMilitaryFinance
Posted by MultiRoleMaven
1 Comment
You are paying down the rate through points (2%).
The 3% credit you could look at a way to offset. Builder does this because the upgrade cost to the builder is much lower than the list price you pay for the upgrade. Builder does the uograde at thier cost and charges you retail. Lender gets the kickback from the builder and you likely get a competitive rate in return for using the 3% for the upgrades.
Only you can determine if the money washing is worth the prices.
Remember, the upgrades prices are funny things. The base price of the house with zero upgrades includes cabinets, toilets, windows etc. Common upgrades include fancier cabinets, flooring, etc. You pay the full retail msrp for the upgrades. Builder only soends the difference between what the base cost is to the upgrade. Labor is really the same and already in the price.
Typically, other than convinience, you are overpaying for those upgrades however it is nice not having to do the construction later.