I am in the midst of buying another house. I thought I might be able to ask some of you money savvy folks an opinion.
Basically I can either do a conventional loan with 20% down, or a VA loan with anywhere from 0 to 20% down. I am weighing the benefit of the VA loan, if I take the money saved and invest it. For the purposes below, I said a 5% return. Obviously there are taxes and fees but I dont need the money and could mitigate that a lot using the right account. There is a VA funding fee for a VA loan, for the accounts below I used 1.5% and 3.3% which is relative to the money down, if any.
I think obviously an investment account IS a risk, but I think 5% is historically very conservative.
Stay with me... numbers.
If I put 20% down at 69600, I have 278,400 loan. 0% VA funding fee, 0 dollars initially invested, but I invest another 301$ per month(the difference between the payment of the 0 down loan monthly) into an account gaining 5%. After 30 years, my mortgage is paid and investment account is at 245,428.
On the other end of the spectrum, I put 0% down, finance 348K with a 3.3%($11484)VA funding fee(no PMI on VA). I have $58116 remaining that I saved from not doing a down payment and invest it into a 5% return, but dont contribute to this account monthly for the purposes of this comparison. After 30 years, the house is paid off, and the account is at $251174.
One more, if I put 5% down on the VA loan, 17,400 down. 330600 loan, with a 1.5% fee at $4959. The remaining 47,241 after down payment and fee is invested at 5%. After 30 years, house paid and investment at $265,326.
Am I thinking clearly here? It seems to me, that the investment is favorable, and that is if I dont see a higher rate of return.
Basically I can either do a conventional loan with 20% down, or a VA loan with anywhere from 0 to 20% down. I am weighing the benefit of the VA loan, if I take the money saved and invest it. For the purposes below, I said a 5% return. Obviously there are taxes and fees but I dont need the money and could mitigate that a lot using the right account. There is a VA funding fee for a VA loan, for the accounts below I used 1.5% and 3.3% which is relative to the money down, if any.
I think obviously an investment account IS a risk, but I think 5% is historically very conservative.
Stay with me... numbers.
If I put 20% down at 69600, I have 278,400 loan. 0% VA funding fee, 0 dollars initially invested, but I invest another 301$ per month(the difference between the payment of the 0 down loan monthly) into an account gaining 5%. After 30 years, my mortgage is paid and investment account is at 245,428.
On the other end of the spectrum, I put 0% down, finance 348K with a 3.3%($11484)VA funding fee(no PMI on VA). I have $58116 remaining that I saved from not doing a down payment and invest it into a 5% return, but dont contribute to this account monthly for the purposes of this comparison. After 30 years, the house is paid off, and the account is at $251174.
One more, if I put 5% down on the VA loan, 17,400 down. 330600 loan, with a 1.5% fee at $4959. The remaining 47,241 after down payment and fee is invested at 5%. After 30 years, house paid and investment at $265,326.
Am I thinking clearly here? It seems to me, that the investment is favorable, and that is if I dont see a higher rate of return.