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Easiest Decision Ever

By: Grant Moon 09/25/14 04:16 pm

VA mortgage rates are as competitive as they come. And unlike other mortgage programs, the rate and monthly payment doesn’t go up without a down payment. You can find conventional loans requiring 5.00% down but the rate goes up. Quite a bit. And there’s mortgage insurance that increases the monthly payment on conventional loans as well as FHA mortgages. And new guidelines for FHA loans means the monthly mortgage insurance payment will never go away for the life of the loan.

How does that compare to a 30 year VA mortgage payment? Let’s say the loan amount is $250,000, a 30 year rate at 4.00%, credit score is 660 and using a VA mortgage. The principal and interest payment is $1,193 with no monthly mortgage insurance payment. We won’t mention taxes and insurance payments as those won’t change. Oh, remember no money down, right?

With a conventional loan, because there is a 5.00% down payment and the credit score is 660, the interest rate goes from 4.00% to about 4.375%. The principal and interest payment is $1,248 but you also have to add the monthly mortgage insurance premium of $191 for a payment of $1,439.

Look at the FHA program now. With 3.5 percent down and a 660 score the rate goes from 4.00% to 4.25%. The principal and interest payment is $1,229 and when you add the monthly mortgage insurance premium is another $281 for a payment of $1,570. No need to do the math because I already have. Which is the best deal?

VA $1,195
Conv. $1,439
FHA $1,570

I think that’s all we need to say about that.

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