Prospective homebuyers may be discouraged from buying a home if they do not have the money for a down payment, but military veterans can use VA loans to avoid putting money down.
The cost of appraisals is rising. It is a standard part of a mortgage closing to pay for an appraisal, and these fees are on the rise. The home appraisal confirms that the house is worth the purchase price.
A lender may withdraw the loan offer if the home’s appraised value is $200,000 instead of $250,000. In such cases, lenders will not sell the house and get repaid fully if any borrower fails to pay the mortgage.
Home appraisal fees are passed on to borrowers.
The VA is now raising appraisal fees in some markets. These increases are due to high demand in some areas for appraisal services. Unfortunately, those increases will lead to increased overall VA home loan costs.
Appraisal fee changes won't affect every market. They are more common in rural areas, so VA loan applicants in those areas may need to be prepared for higher costs. Currently, VA appraisers can charge up to $1,000 per appraisal in California's high-demand counties.
Homeowners don't have to pay their closing costs in full upfront, so VA loan applicants won't have to scramble to come up with the cash for their closing if they can't afford those higher appraisals. Instead, they can roll the higher fees into their loans and pay them off over time.
VA loan applicants should still be prepared to deal with these fees in some markets.
If homebuyers face high closing costs, they can always explore other options besides VA loans. The fact is that VA loans do not require a downpayment, so for many borrowers, these mortgages are the best way for one to purchase a home.