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MEL SMITH--LENDER OF THE MONTH

Should I Money Down on a VA Mortgage?---NY, NJ, and CT Mortgage Tip

Tuesday, June 6, 2017 - Article by: MEL SMITH--LENDER OF THE MONTH - Meadowbrook Financial Mortgage Bankers - Message

VA Mortgages also known as loans from the Department of Veterans Affairs are renowned for not requiring a down payment. Nevertheless, there are very good reasons to put money down on a VA loan.

You'll pay a lower VA funding fee

First off, VA mortgages necessitate a funding fee, whether you make a down payment or not.

You'll have a lower monthly payment and pay less in interest

With a down payment, your monthly payment and lifetime costs are lower.

You have a bigger edge in and can better navigate a competitive market.

Existing in a competitive housing market can present challenges to the no-down payer.

Having an edge by putting in some money upfront displays to sellers that you are a serious buyer. Additionally, a percentage of your down payment might be allocated to earnest money.

You'll have instant equity in your home

Without a down payment, you'll likely have no equity in your home right at the start. If property values fall, you'll be upside down. That's when the market value of a home is less than what you owe. In that case, you can be in a real bind if you need to relocate and can't make enough on the sale of your existing house to purchase another.

Having value built into your home provides you with some financial options. For example, a home equity line of credit or home equity loan can come in handy. Being able to tap your home's equity can be a real money-saver when major home repairs or upgrades are needed.

You may not have a choice

In some scenarios, you may have no choice but to make a down payment:

If the home appraises for less than the purchase price, you'll have to put enough down to make up the difference.

Also, if the home you desire to acquire costs more than the county loan limit approved for VA loans, you'll have to put enough down to make up some of the difference. In each scenario, you'll have to cover the gap or break the deal.

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