Watch out for VA closing costs
There are plenty of reasons to love the VA loan. But what about closing costs? In this episode of From Military to Millionaire, David breaks it down.
What Are Closing Costs, Anyway?
Closing costs are the fees you pay when finalizing a mortgage. The only way out of closing costs is getting the seller to pay them. Closing costs typically range between two and five percent of the loan amount. The most affordable option is to pay them as a one-time expense. Otherwise, you can also wrap them into the loan. With this method, you’ll be paying interest on your closing costs for the loan's duration. It’s possible to lower your closing costs by negotiating or shopping around.
You pay closing costs on the day you close on the property unless you pre-paid them or wrapped them into the loan. There are recurring and non-recurring closing costs. Recurring costs are costs you pay throughout your ownership of the property. They include things like mortgage interest, principal interest, taxes, and insurance. Make sure you talk to your lender so you know what to expect your recurring costs to be. Non-recurring fees are the one-time fees you have to pay when you close on your property. These include things like home inspection, appraisal fees, loan-related fees, pre-paid interest, mortgage broker fees, title fees, and loan origination fees.
While you should scrutinize all of your closing costs, the ones you really want to pay attention to are the loan origination fees. This is because lenders can easily overcharge you. Expect to pay between a half to one percent of the loan cost on origination fees.
Take Control of Your Financial Future with David's Help
David Pere is an active-duty Marine who is on a mission to educate the military community about financial readiness. Most people hear that term and roll their eyes, but Pere wants everyone to know that readiness can be achieved – without a lot of effort. He teaches personal finance and real estate investing to service members to help increase savings and increase their chances of achieving financial freedom.
Want to learn more about Pere? Check out the Military to Millionaire website, and connect with him on Instagram or Facebook. Subscribe to his YouTube channel here! Take a look at David's book – The No B.S. Guide to Military Life here.
Looking for more ways you can be financially strong? Check out what's new on our Mighty Money page.