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How FHA and VA
Loans Affect Your Offer
Additional Costs to the Seller
If you are considering obtaining a VA or FHA loan
to finance your next home purchase, your realtor will inform you
that this information will need to be disclosed in your offer. The
reason for this additional disclosure is that government loans
require additional obligations on the part of the seller that may
result in additional financial and or performance obligations for
the seller.
Non-Allowable Fees
For starters, VA and FHA loans will prohibit
buyers from paying certain types of fees that are commonly charged
by lenders, escrow companies, settlement agents, and title
companies. These fees are commonly referred to as
"non-allowable" fees. They are not eliminated from the
transaction however rather than being charged to the buyer, the
seller is required to pay these additional fees.
In most instances, the majority of these so-called
"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 normally
pay on an offer with standard or conventional financing, this is
why this information must be included in your initial offer.
Additionally, it is important to recognize that since this type of
financing will cost the seller additional money to close the
transaction, the seller will likely be less negotiable on their
sales price.
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