IS CONVENTIONAL FINANCING BETTER THAN VA in 2013?
A retired Vet posted a version of this quetion on Zillow. His lender had told him that if he had money to put down, conventional financing would be better for him. Based on the way he posed the question, I am guessing that his lender did not give him a good reason why.
Although there are many things I don't know about the buyer or the lender, here is my answer to that queston.
In most cases, VA will be a better loan. I would recommend that you have your lender run an amortization schedule to show you why conventional is better than VA. Have them run an closing cost analysis too, including the difference in rates and fees. They should be able to do a break down for you to prove what he/she is saying about you being better off. Don't take their word, have them show you!
Some lenders/realtors are under the mistaken impression that VA loans are difficult. They think the appraiser is more strict or more conservative. VA is primarily concerned about health and safety of our Vets (at least in housing :) ) VA loans are great loans.
The lender is most likely trying to save you the funding fee required by VA, but they may not be taking the monthly mortgage insurance into account. By the way, If you have even 10% disabiltiy through VA, the funding fee is waived.
Long term, the fact that your VA loan will be assumable may also be important. If rates go up (as expected) and you have a home with a 4% or better VA loan, you may be in a better position to sell than someone with conventional financing.
If you put between 5% and less than 10% down on conventional, the seller can pay up to 3% toward your closing costs. WIth VA, the seller can pay ALL of your cost, even with nothing down. If that $25,000 you are thinking of putting down is making you money (or could if invested) and you can do 100% financing through the VA, that may actually be in your best interest.
Check out all options to make sure you are getting the right loan for you!
Bridget McGee Maryland Mortgage Mama NMLS# 196068 SWBC Mortgage. 410-960-2061 EHO firstname.lastname@example.org or www.marylandmortgagemama.com
If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure!
If you already own your home, we are happy to provide a no-cost mortgage review to help you to determine if refinancing may be in your best interest. Please contact me at 410-960-2061.