Can I refinance my current house and get a VA loan?

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I am a veteran, used it in the past and got a mortgage again without the VA. now that rates are really low, I really want to take advantage of these rates and I want to use the VA so I can avoid PMI and I understand there is a funding fee with the VA

I am about to purchase my first house. The mortgage company that I am speaking with at this time is charging me 2% as a VAFF or VA Funding Fee in addition to all of the other closing costs and fees one would normally pay.

Upon reading the regulations for VA loans and mortgages, I have found the wording “reasonable costs” associated to this expense.

Is 2% a reasonable fee for VAFF?

Thank you

5 Comments
  1. Reply
    golferwhoworks
    February 9, 2011 at 5:46 pm

    yes you can do just that
    I am a mortgage banker in TN & KY

  2. Reply
    Fort Sill Army Wife
    February 9, 2011 at 6:23 pm

    We are closing on our house next week and used my husband’s VA loan, the funding fee for first time users with no down payment requires a 2.15% fee, up to 10% down payment requires a 1.5% fee, and 10% or more requires a 1.25% fee
    For subsequent users, no down payment requires a 3.3% fee, up to 10% down payment requires a 2.50% fee, and 10% or more requires a 2.25% fee.

  3. Reply
    Joshua Crumbaugh
    February 9, 2011 at 7:11 pm

    The VA funding fee is set by the VA and not the lender; so anywhere you go you’ll have the same fee. The factors that the VA uses to calculate this fee are rank, time enlisted, and if you’ve use your VA to purchase a home in the past. The funding fee is the same as PMI or mortgage insurance on a conventional loan. That 2% goes into a pool that is used to lower the risk for lenders and give them the ability to provide 100% financing.

  4. Reply
    Certified Mortgage Specialist
    February 9, 2011 at 8:09 pm

    Yes, the 2% funding fee is a requirement by the Veteran Adminisration for active duty or veterans who purchase a home after January 1, 2004 and put zero down. For example if you put 5% down then the fee would be 1.5%.

    The fee is paid to the Veteran Administration not to the mortgage company you are using. This fee was implemented by the VA to absorb some of the costs associated with veterans who default on their VA guaranteed loans.

    Most of the times this funding fee is financed into the loan and not paid as an out of pocket expense at closing.

  5. Reply
    QuarterRoy
    February 9, 2011 at 9:00 pm

    Yes, this is normal. Look past that fee. You will be saving thousands of dollars more than that with the lower interest rate!

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