e. What Closing Costs, and so on, can be Included in the Loan?

The following fees and charges may be included in an IRRRL:

·  The VA funding fee, and

·  any allowable fees and charges discussed in section 2 of chapter 8; such as, all allowable closing costs, including the lender’s flat charge.

However, There Is One Limitation

While the borrower may pay any reasonable amount of discount points in cash, only up to two discount points can be included in the loan amount.

Although VA does not require an appraisal or credit underwriting on IRRRLs, any customary and reasonable credit report or appraisal expense incurred by a lender to satisfy its lending requirements may be charged to the borrower and included in the loan.

The lender may also set the interest rate on the new loan high enough to enable the lender to pay all closing costs, as long as the requirements for lower interest rate and payments (or one of the exceptions to those requirements) are met.

For IRRRLs to refinance loans 30 days or more past due (which must be submitted for prior approval), the following can be included in the new loan:

·  Late payments and late charges on the old loan, and

·  reasonable costs if legal action to terminate the old loan has commenced.