The non-allowable fee's are the same for all loans not just IRRRL refinance loans. Here is the list directly out of chapter 8, section 2 of the VA Lenders handbook.

·   lender’s appraisals (if a 2nd appraisal were required)

·   lender’s inspections, except in construction loan cases

·   loan closing or settlement fees (charged by title companies generally)

·   document preparation fees (lender charged)

·   preparing loan papers or conveyancing fees (title or lender)

·   attorney’s services other than for title work

·   photographs (no idea what this means)

·   interest rate lock-in fees (if you locked for extended periods like 90 days)

·   postage and other mailing charges, stationery, telephone calls, and other overhead (lender charged)

·   amortization schedules, pass books, and membership or entrance fees (never heard of these)

·   escrow fees or charges (costs for escrowing, not your actual escrows)

·   notary fees (similar to closing fee's)

·   commitment fees or marketing fees of any secondary purchaser of the mortgage and preparation and recording of assignment of mortgage to such purchaser

·   trustee’s fees or charges

·   loan application or processing fees

·   fees for preparation of truth-in-lending disclosure statement

·   fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and tax service fees.

Keep in mind that it's intended that these fee's are paid out of a flat 1%  fee charged by the lender. If the lender doesn't charge a 1%  fee then the borrower can pay some of these fee's. This guideline is interpreted differently by each investor, some allow all to be charged to the borrower and some don't. If your broker/lender isn't charging an origination fee and these fee's are not being paid by them this is most likely why.

Hope this helps.

My orginal VA Loan was $156,000 financed at 6.5% in October 06 for a condo in Jacksonville, FL and I currently owe $151,890.00.  With rates dropping so low, I thought I would contact my current lender and ask about their IRRRL rates.  The local branch sales manager contacted me recently and stated that I could refi for 30 years with an interest rate of 4.5%, no points.  I would have a monthly payment savings of $185.00.  Now I have a few questions. 

1.  I asked if it would be better to refi for 20 years since my payment would remain about the same and I am concerned about negative equity with the housing market being what it is.  I was informed that it would be better to refi for 30 years and take advantage of the monthly savings.  What is the best option here?  Monthly savings or accruing equity?

2.  My closing costs will be approximately $3000.00 and I am being charged an application fee of $350.00.  I was told I would need to pay the application fee up front, but it is applied to the closing costs.  Do these closing costs sound reasonable for an IRRRL?  Why am I being charged an application fee?  Should I request an exact breakdown of these fees?

Any assistance that can be provided would be greatly appreciated.

Cristy,

1.  Most lenders do not give a better rate for a 20 yr fixed rate when compared to a 30 year fixed rate.  Some don't even offer a 20 year fixed rate government loan and I know of one lender who's 20 year is actually a higher rate than the 30 year.  If you simply pay extra on the mortgage, you will pay it off faster.  Take the 30 year and keep paying what you are paying now and you will be on pace to pay it off closer to 20 years.  You will be rewarded with the option of making the smaller minimum payment if your finances get tight.

2.  The closing costs seem reasonable, especially given that FL has high title fees.  The application fee is probably in lieu of paying for an appraisal or it is simply to gain more commitment from you to not take another offer.  You should receive a GFE (Good Faith Estimate) within 3 days of completing an application.  There are many brokers who would not charge an application fee.  If you would prefer, check out our Directory above and you will find some very knowledgeable  professionals who could help you.

Kent,

Thanks so much for your insight.  This has been very helpful.

Thanks Again,

Cristy

You're welcome.  Let us know if you have other questions.  Good luck!

4.50% is an incredible rate. LOCK, LOCK, LOCK. Don't spend anymore time shopping. Close as quick as you can before they change their mind.