VA versus Conventional Mortgage
I'd like to consider myself "well versed" when it comes to financial instruments...however, I will admit that home mortgage advice is a subject I am in dire need of.
I'll be retiring from the Air Force next May (terminal leave in February) and would like to buy my FIRST home. I've been doing some research lately but wanted to get the board's advice on whether to apply for a VA loan or a conventional.
VA Loan (Pros)
- Backed by the US Gov/easier to qualify
- No money down
- No PMI
VA Loan (Cons)
- Higher interest rate
- 2 to 3% funding fee (different than origination fee and non-negotiable)
I have over $150,000 in investments and no debt. My retirement pay will be right around $2000 a month.
The mortgage I would be applying for would be in the $200,000 or so range. I have enough saved to put 20% down & have a FICO score of 803 (so I'm sure I can qualify for a conventional mortgage). However, after crunching the numbers (interest rate/APR, downpayment, points, etc...), it looks like I'll only be saving $200-300 per month going the conventional route. I guess the part I'm struggling with most is whether the "hit" to my savings is worth the increased cash flow. I can remember when they said that a downpayment was "instant equity"...maybe/maybe not in today's market.
FYI, I used PenFed's current interest rate numbers, which have a 1% origination fee for both VA and conventional.
Any advice would be greatly appreciated. Thanks!