Offer Price - How FHA and VA Loans Affect...

If you are obtaining a VA or FHA loan to finance your home, you must list that information in your offer. The reason is because government loans attach additional financial and performance obligations on the seller. Non-Allowable Fees VA and FHA loans prohibit buyers from paying certain types of fees that are often charged by lenders, title companies, escrow companies, and settlement agents. These costs called "non-allowable" fees still get charged anyway, but as the buyer, you are "not allowed" to pay them. The seller ends up paying them instead of you. Your lender is responsible for most of these non-allowable fees. When you make an offer you should have already been pre-qualified by a loan officer. Then, you or your real estate agent can inquire how much the lender's non-allowable fees will be. An experienced agent should also have an idea of what non-allowable fees will be charged by the Title Company, escrow agent and settlement agent. You must be including these fees in your offer. Because the seller will be paying these additional fees, you should realize that they may be less negotiable on the price. VA and FHA Appraisals Compared to conventional loans, the home appraisal inspection for FHA and VA loans will be a bit more detailed and more expensive. Appraisers of these homes are required to perform certain minimum inspections, and evaluate the market value of the property, These inspections are not as detailed as a professional home inspection, so do not consider it a substitute. At times repairs will be required. The seller would not be obligated to pay this additional cost for someone obtaining conventional financing. This is why your offer should include a maximum figure for these repairs. Otherwise the seller would be paying an open amount for repairs, and they do not want to do that. Keep in mind; the figure you list will most likely affect the seller's unwillingness to negotiate on price. If you put $1,000 as an estimate, the seller may be $1,000 less negotiable on their price. But if the inspectors require no repairs, you may be able to get the house for $1,000 less than what you and the seller agreed on as the price. The smart thing to do is to add a clause to your offer something like this. "If required repairs cost are less than the maximum amount allowed, the excess is to be credited toward buyer's final closing costs."