Cash is King. Well, maybe not if you want to buy a home. According to the recent Washington Post article, The case for not paying off yourmortgage by retirement by Jonnelle Marte there’s good debt and bad debt. Jonnelle considers a mortgage good debt. Cash is liquid and you can’t access your cash if it’s tied up in your home. Of course, there’s also the added benefit of deducting the mortgage interest on your home. There are quite a few mortgage options now that allow you to put down a small down payment. If you are a first time home buyer you can put down as little as 3% if you qualify for a conventional loan. FHA currently allows for down payment of 3.5%. For all you veterans (thank you for your service!) if you qualify, you don’t have to put anything down. Yes, VA loans allow for $) down payment, which means 100% financing. The USDA loan also allows for $0 down payment. So, as you can see, there are many loan options available right now. However, it’s important to know the different features of each. For example, VA has $0 monthly mortgage insurance fee. USDA has .30% monthly mortgage fee. FHA’s monthly mortgage insurance is .85%. The VA, USDA & FHA loans are government loans and they ALL have up front funding fees, so be sure to discuss those with your mortgage lender. Also, FHA now has monthly mortgage insurance for the life of the loan. It’s not removed once you have over 20% equity in your home like other loan products. Ask your lender all the questions you can about the differences in all the parts of your monthly mortgage payment as well as the costs of the loan, such as the funding fees.
***Please keep in mind this is only an example for illustration purposes. These interest rates may not be available and/or you may not qualify for this loan type.
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