IT IS WORTH LOOKING AT ALL MORTGAGE OPTIONS

When you purchase a home the amount of money that you have for down payment will impact your monthly mortgage payment.  Let me give you an idea of the difference using a home price of $250,000.00.  

A conventional mortgage is available with no mortgage insurance premium if you are in a position to put 20% down.  The down payment amount would be $50,000.00.  

A VA mortgage is available with NO money down and if you are an eligible veteran buying your first home you are responsible for paying a VA Funding Fee of 2.15% of the loan amount.  With a sales price of $250,000.00 and no money down the VA Funding Fee will be $5,375.00.  This amount on a monthly basis based on a rate of 4.5% would be $26.66.  

A conventional mortgage is available with 5% down.  That would be $12,500.00 for the down payment.  The loan would have a private mortgage insurnance premium that is based on the loan amount.  In this example, the PMI cost monthly would be $186.04.  

A FHA mortgage is available with 3.5% down.  That would be $8,750.00. The new FHA insurance premiums effective October 1, 2010 are calculated with two parts.  The up front mortgage insurance premium is 1% of the loan amount or $2,412.50.  When financed this will be $12.13 per month.  The second part of the FHA insurance premium will be a monthly premium based on the loan amount x .0090 / 12.  This will be $180.94 per month.  

Conventional mortgages with 10% or 15% down will have lower PMI premiums.  

VA loans for veterans with at least a 10% VA disability will not be charged a VA Funding Fee.  

The FHA insurance premium will be lower if the borrower is putting down 10%.  

What you will find is that there is not always one right answer.  Make sure you are talking to a mortgage banker who offers all of these mortgage programs.   At McCue Mortgage we do just that.