VA or traditional?

[BubMunkeyBles]

What is better? I feel like we're throwing money away that could be put into a downpayment if we go VA loan. We can easily save up a 10% downpayment for a home (we're looking at buying in about 2 years). We're just starting to research options so we know how much to save.

[CocoaGoddess]

Originally Posted by BubMunkeyBles What is better? I feel like we're throwing money away that could be put into a downpayment if we go VA loan. We can easily save up a 10% downpayment for a home (we're looking at buying in about 2 years). We're just starting to research options so we know how much to save.

I ... don't know why you think that keeping your down payment money in your pocket is "throwing it away". Can you explain that a little better?

As far as going traditional, you can put 10% down, but you will either have to get a second mortgage at a higher interest rate to cover the other 20%, or you will have to get PMI. Unfortunately, in today's market, a lot of lenders are not comfortable with a 10% down payment. They want to see 30%, and if you don't have that, then be prepared to pay extra money to compensate for the lack of down payment.

Edit: Some people are uncomfortable purchasing a house without any skin in the game, which is understandable. You can go FHA and put only 3.5% down if you want to go that route. With FHA though, if you don't put 20% down, you will have to pay a mortgage insurance premium. I *think* it's 1.5% of the purchase price, but don't quote me on that.

[gunsgirl]

who says you cant put a down payment with VA?

if you go conventional you will need 20% down- whether this is from savings or a 80/10 loan ( which is 2 loans an 80% and a 10% and you will pay 10% down in cash).

[BubMunkeyBles]

It's all the fees with the USAA loan that makes me feel like we're throwing money out and it doesn't even go towards closing costs if we can get that covered into the deal when we buy. Maybe I'm misunderstanding VA loans completely (very possible, its all kind of confusing).

[CocoaGoddess]

Originally Posted by gunsgirl who says you cant put a down payment with VA? if you go conventional you will need 20% down- whether this is from savings or a 80/10 loan ( which is 2 loans an 80% and a 10% and you will pay 10% down in cash).

True. I guess it just depends on the price of the home, because 10% wouldn't lower your monthly payments by all that much--but some people don't feel comfortable financing 100%, so a downpayment for a VA would be a good option, and you can still avoid PMI.

But then you have to pay the VA Funding fee, which would make it all a wash anyway.

[BubMunkeyBles]

I just googled it... They will lower the percentage of funding fee if we put money down. So we could put down 10%, get a loan and take the lower funding fee, win win situation all around. So for anyone else who is interested here's the link I found: http://www.valoans.com/va_facts_funding.cfm