For example, the VA loan is assumable, meaning later on down the road when interest rates go up, you can market your home with an assumable low rate which would make your property more marketable.
Also, the VA loan has the Interest Rate Reduction Feature (IRRL). That will allow the veteran to capture future lower rates without requalifying or re-appraisng the property. This is a huge benefit because you are able to act on significant rate decreases.
That being said, the only drawback is that the VA has a funding fee on all of their loans of up to 3.3% depending on your particular scenario. There are some exceptions to the funding fee. If you have a service connected disability, the funding fee is waived. If that is the case with you, no brainer, take the VA loan.
Also, there is nothing that says you cannot put down more of a down payment on a VA loan. If you put down say 5% or 10%, the funding fee is reduced. So you keep some cash in your account, take a slight funding fee but still have all of the benefits of the VA loan in the future.
I have attached a link to a blog post I wrote about the VA loan and its benefits. I do a lot of VA loans and am able to complete them in CA as well. I would be happy to talk more about it with you.
Feel free to call or email.
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Rey Gallegos ( NMLS ID 557038)
Loan Officer | Branch Manager
W.J. Bradley Mortgage Capital LLC ( NV License # 504)
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Henderson, NV 89052
Honestly, your scenario comes down to a preference. If you feel more comfortable having at least 6 months of reserves in the bank, then you should go this route and minimize your down payment. It would be best to compare all your options of VA, FHA and conventional loans for your purchase so you can see what your total payments would be and what you feel comfortable with. VA will allow for zero down payment if you have enough entitlement from your certificate of eligibility. However, the funding fee is going to be slightly higher than if you were to put down any amount of down payment. FHA will allow for a minimum of 3.5% down payment, but will have an up front mortgage premium of 1.0% financed into the loan and a monthly mortgage insurance, required for the first five years of the loan. For conventional, you can go as low as 5% down payment on a loan amount up to 417K, but you will have mortgage insurance as well. That payment can vary, depending on the rate quote obtained by an approved mortgage insurance company.
If you'd like to discuss your scenario further and see all the options written out so you can see what makes sense for you, please feel free to give me a call or send me an email. Best of luck to you.
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I agree with everyone else that it is completely up to you. I use finance specific programs to develop side by side comparisons so my clients can make educated decisions with actual numbers at their disposal. I have always found that people can make their own decisions about what is best for them once they have all of the pertinent data. I would be happy to provide you a sample of the program if you would like to contact me via my profile. No obligation, of course. Best to you!
As stated below, it is completely a matter of preference and what home you want to purchase. Obviously putting more down will get you a lower payment. I would think about what monthly payment suits you, what the price of the home or homes you are interested is and work the numbers from there. If you need any specific assistance, please contact me directly.
I agree with your Lender. If you can afford the higher payment, it's better. You can always pay more to the principal and cut down the years. During these trying times, it's a good idea to have money in the bank
Call me to discuss further. We can make a plan that best fits your specific Real Estate needs.
You can break each scenario down on a spreadsheet. I do this for all of my buyers, so they can see what their monthly payments would be whi8chever way they bought.
If you put down 20%, of course you'd have 20% to lose for whatever reason (price settling, foreclosure, for example), but you'd be able to buy more house, if that's important to you. If it's not, and if you can easily afford the monthly payments with a 0% down loan, and the homes you're seeing fit your needs for now and into the future, why invest your own money? Just my opinion. A VA loan is a really good benefit.
You can also pay down your loan later if you want to, or make an extra payment to help pay down your interest. I'd advise talking to your lender about this, and also for a different perspective, your accountant.
It depends on how long you want to keep the house. Is it long term or short term? If you want the house on a long term I would put larger down payment so you can have a lower monthly mortgage and no MI (mortgage insurance). When you have a bigger down payment, you eliminate this added monthly fee on your mortgage payment, in addition, your monthly payment is lower due to a lower principal balance. If you are buying a house on short term and not keep it for a long time, I would use VA no money down, two or three years later, you can sell or rent it out.
Your brother is right, you'll end up losing your down payment you put in the house if you ever get your house in foreclosure. It is also wise to keep saved up money in the bank just in case you temporarily lose a job or whatever circumstances, you'll have money to cover the mortgage payments until you find another job.
Let me know if you need my help in finding houses. We also have a lending partner who is expert in VA loans, and all types of mortgage loans.
Feel free to email me at Maria@whisselrealty.com
These are great (and critical) questions to ask.
What I do for my own investments is compare different scenarios side-by-side in a spreadsheet (like Excel).
Also, though you are buying this home for yourself, it is important to see if the property would also work as a rental. Why? Things in your life could change and it's good to know if income from the property could cover the carrying costs (principle, interest, taxes, insurance, repairs, HOA, etc.)
Be sure that any property you purchase has the widest possible appeal to other buyers should you need to sell it in the future.
I am happy to email you a sample investment analysis spreadsheet. (No cost to you; not selling anything; just something I do to help people out). You can contact me at Allison@allisongaynor.com.
Good luck to you!
Many financial advisors advise paying off your debt to not be unencumbered by debt. Also, advisors suggest building reserves of at least 6 months up to a year since it is taking longer to find a job in todayâ€™s economy. Some financial experts recommend putting 20% down payment when buying a home. With todayâ€™s lower interest rates, you may want to consider a 15 year loan so loan will pay off sooner.
Prudential California Realty
That might end up being a VA loan or a conventional Fannie Mae backed loan with single premium mortgage insurance (so you won't have monthly mortgage insurance). In short, make your mortgage decision more based on "you centric" variables rather than rules of thumb.
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