As a veteran, you are guaranteed a home mortgage you can afford and one which is granted to you because of your veteran status. That means that no veteran ever needs to be homeless when they (and you) can all get a mortgage for a home. The mortgages are always very low interest as well in order to help military families remain in comfortable, suitable housing without paying through the nose to keep a roof over their heads. However, there is one fee that most veterans do not realize is attached to this program: closing costs.
Closing costs on a house for a non-veteran exists to pay the real estate agents involved and to pay any real estate lawyers present who witness and legalize the transfer of property. Even as a veteran, you will still have to pay these closing costs. However, there is a different set of rules that apply to veterans and home purchases than those rules that apply to a civilian. Knowing what those differences are will help you make a good choice about the home you buy.
Buying a Dream Home vs. Buying a Starter Home
As a veteran, buying a big, luxurious home means you will pay more for the house but less in closing costs. Typically, one to three percent of the total value of a luxury home is the closing fee. Conversely, if you buy a starter home (i.e. a smaller, less expensive house), you will pay three to five percent of the home's value in closing costs. This may seem somewhat unfair, considering that you pay more on the smaller home than you do on the larger home, but when you consider that you are paying an enormous amount of money for the larger home, it gives you a little more perspective. In some cases, the closing costs versus the prices of the homes balance out, equaling about the same when everything is said and done.
Closing Costs for Civilians
Closing costs for civilians, by comparison, are between two and five percent of the total purchase price of the home, no exceptions to the rule. As a veteran, you are paying slightly less than a civilian for these fees for a larger home. Additionally, when you consider that you are paying about the same in closing costs as a civilian when you buy a smaller home, it does not seem like a great deal. However, you already benefit from a particularly lower interest rate than civilians, making your mortgage interest far less than what a civilian pays over time for a similar home.
Contact a company like VA Loan Lending for more information.Share