The main appeal of VA (Veterans Affairs) loans is that they have lenient requirements compared to conventional mortgages. If you meet the qualifications, you can finance a home purchase without making a down payment. On top of that, you won’t have to pay mortgage insurance, which is required in conventional loans if you pay less than 20% down payment. VA loan providers in Ogden note that if you do qualify for a VA loan, you can choose not to make an initial payment. However, you shouldn’t skip the idea of putting down 5% or 10%. Doing so will enable to enjoy a lower monthly payment and to pay less mortgage. Here are the other reasons to make a down payment on your VA loan.
Reduce Your Funding Fee
While VA loans don’t have mortgage insurance, you’ll have to pay funding fee, which covers the losses of the lenders in case your default on the loan. The amount of your funding fee is based on your services, down payment, and whether or not you’ve obtained a VA loan before. You can easily reduce this by making a 5% down payment or more.
Lower Your Monthly Payments
By putting a down payment, you can reduce the overall amount of mortgage you have to pay. As there’s less money owed, it can lower your monthly payments and help you save thousands of dollars in total interest charges. This can also cut your VA funding fee.
Gain a Competitive Edge
If you’re buying a house in a competitive market, you’re likely to face some challenges if you don’t put some money upfront. Putting some money down, however, can show sellers that you’re a serious buyer. A down payment, furthermore, will allow you to have immediate equity in your house. If you qualify for this type of loan, it’s still your call if you want to make some down payment. You can still get a loan if you choose not to, but don’t dismiss the benefits of putting some money upfront. Contact a VA loan provider and learn more about this mortgage.