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I feel like I lucked out. My rate is 3.75% and I paid no money down (VA loan).
This sounds like you already closed on your house. You can never compare a rate you received on a different date than what someone has today. Rates change all the time. That's like someone from 2 years ago saying, "Ha, I got a 3.25% and would never take 3.75%!" You have to compare apples to apples, and a VA loan is different than a conventional loan.
Also, if you don't have disability, you paid a funding fee that the OP isn't paying. That adds up very fast.
This sounds like you already closed on your house. You can never compare a rate you received on a different date than what someone has today. Rates change all the time. That's like someone from 2 years ago saying, "Ha, I got a 3.25% and would never take 3.75%!" You have to compare apples to apples, and a VA loan is different than a conventional loan.
Also, if you don't have disability, you paid a funding fee that the OP isn't paying. That adds up very fast.
Sure, I paid a funding fee (funding fee was about $9,000 on a $460,000 condo if I recall vs. the $46,000 - $92,000 I would've paid under more traditional mortgage down payment deals . . . lord knows that I could not afford that at the time I closed on my property), but I didn't pay a down payment and I'm not paying mortgage insurance. Had I put 10% down, my rate would've been about 3.3%. I don't disagree with your other parts, but even when I got my deal last year, I knew others purchasing around the same time whose rates were higher. Granted, we're different people with different credit scores (that much is clear), but I still think I got a pretty good deal.
Sure, I paid a funding fee (funding fee was about $9,000 on a $460,000 condo if I recall vs. the $46,000 - $92,000 I would've paid under more traditional mortgage down payment deals . . . lord knows that I could not afford that at the time I closed on my property)
The problem with you comparison is that you will never see the funding fee again. You basically threw $9000 away to keep a down payment in your pocket. At least the down payment goes towards your equity. I rather have equity than a $9k closing cost.
I explain this to my clients all the time. Many VA buyers don't understand the funding fee. VA financing is a no-brainer if you have disability because it's waived, but when you have a funding fee that is just a closing cost and not putting equity into the house, that's a lot of money to "throw away".
The problem with you comparison is that you will never see the funding fee again. You basically threw $9000 away to keep a down payment in your pocket. At least the down payment goes towards your equity. I rather have equity than a $9k closing cost.
I explain this to my clients all the time. Many VA buyers don't understand the funding fee. VA financing is a no-brainer if you have disability because it's waived, but when you have a funding fee that is just a closing cost and not putting equity into the house, that's a lot of money to "throw away".
Those are fair points and I'd understand that many would prefer to not go the VA route for those reasons. But, for me, I'd have to delay my purchase for another year at least if I had a traditional loan in order to afford a 10% down payment, at which point the value of my property/or a comparable property (I'm in a hot market) could have very well increased beyond what the old funding fee would have been. I write "or a comparable property" as odds are that my property would not have been on the market if I had to wait that a year. And with condos/single family home prices where I am increasing pretty steadily each year, I'd be paying more money for a comparable unit if I had to wait. So, in my case, it definitely worked out. And my situation is what many people factor in.
Of course, this doesn't even touch on the lack of PMI, which is also a lot of money to "throw away."
VA loans definitely aren't for everyone (and if I had the money to go traditional, I may have done so . . . but, then again, if I had the money to buy in cash, I may not have taken out a loan, etc.), but the loan definitely made sense in my case.
Those are fair points and I'd understand that many would prefer to not go the VA route for those reasons. But, for me, I'd have to delay my purchase for another year at least if I had a traditional loan in order to afford a 10% down payment, at which point the value of my property/or a comparable property (I'm in a hot market) could have very well increased beyond what the old funding fee would have been. I write "or a comparable property" as odds are that my property would not have been on the market if I had to wait that a year. And with condos/single family home prices where I am increasing pretty steadily each year, I'd be paying more money for a comparable unit if I had to wait. So, in my case, it definitely worked out. And my situation is what many people factor in.
Of course, this doesn't even touch on the lack of PMI, which is also a lot of money to "throw away."
VA loans definitely aren't for everyone (and if I had the money to go traditional, I may have done so . . . but, then again, if I had the money to buy in cash, I may not have taken out a loan, etc.), but the loan definitely made sense in my case.
I understand. I had a guy who didn't want to worry about selling his current house for the down payment with his relo, so he forked up the $7700 for his funding fee. He then took his time getting it ready and selling it later. It's definitely an option for people when in certain situations. I'm just saying a lot of people get into VA loans and don't understand there are 3% and 3.5% down options where the funding fee could have better uses. You don't need 10% or 20% down these days.
I'm looking at a loan of about $230k and doing a 30 year fixed conventional loan.
Sale price is $264k, I'm getting a gift of equity for 13% of this, which makes my loan come out to $230k.
My credit score is 800+.
My broker told me that doing a Conventional loan will give me a 4.125% interest rate (no points). I have really excellent credit and was expecting less, but is expecting too much?
Thats a good deal, no points! and not even 20% down.
I just got 4.125 too on similar loan amount, but I had 30%+ down - & no points too!.
I feel like I lucked out. My rate is 3.75% and I paid no money down (VA loan).
Going the VA loan route is also one of my options. My broker said the rate I would get would also be around there. Did putting $0 down make a difference with your monthly payments?
How were your closing costs? Because you'd have to pay the closing + the funding fees, correct? I'm really interested to know how much that is.
I work in title, so I only see what comes across my desk from lenders. The low end of what I am seeing is mostly 4.25 and 4.375. If I come across 4% or lower, it is usually an ARM or they've been in the refi process for many months. So, I would consider that a good rate right now.
Going the VA loan route is also one of my options. My broker said the rate I would get would also be around there. Did putting $0 down make a difference with your monthly payments?
How were your closing costs? Because you'd have to pay the closing + the funding fees, correct? I'm really interested to know how much that is.
Thanks for your reply to my OP.
My closing costs and loan origination fee together came out to $468k (my purchase price was $459k), all of which I rolled into the loan.
In terms of putting no money down, yes it made a difference with my costs. Had I put down 10%, I believe I would be saving between $200-$300 a month. While no chump change, the no money down deal was still a lifesaver for me.
I feel like I lucked out. My rate is 3.75% and I paid no money down (VA loan).
Oil and water. You also paid anywhere from 2.14% to 3.3% in the way of a funding fee added to your loan balance......so you will be upside down for a while. But it shouldn't matter if you plan to stay.
OP, if you were to compare rates between an 80% Fannie Mae LTV and a 90% LTV Fannie Mae loan, the rate for the 90% LTV would actually be lower. Why? The 90% LTV is a more desirable loan on the secondary market - it's insured. If you want to check it out, Google "Fannie LLPA October 2016" and the 5 or 6 page PDF should be there. Those are the "add ons" to base rates to determine someone's final rate. So for this exercise, let's assume we are starting at 4% and 0 points. Now, look at those charts to see what the difference is between an 80% LTV and a 90% LTV.
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